Insulin resistance, characteristic of type 2 diabetes mellitus, contributes to the progression of atherosclerosis, and is at least partly responsible for the poor cardiovascular prognosis in patients with diabetes. By improving insulin sensitivity, thiazolidinediones ['glitazones'] promised an exciting new approach for type 2 diabetes. However, the severe hepatotoxicity associated with troglitazone, the first thiazolidinedione to be approved, threatened to minimise the clinical usefulness of this class of drugs. Troglitazone markedly elevated ALT levels during clinical trials and has been associated with severe and sometimes fatal hepatotoxicity. However, rosiglitazone and pioglitazone have only been associated with isolated episodes of hepatic dysfunction. A review of the literature indicates that hepatotoxicity appears to be associated with specific properties of troglitazone, rather than the thiazolidinedione ring. Thus, newer thiazolidinediones appear to have minimal potential to cause hepatotoxicity and, when used judiciously, offer an alternate approach to the management of type 2 diabetes.