This study characterized single‐ and multiple‐dose pharmacokinetics of canagliflozin and its O‐glucuronide metabolites (M5 and M7) and pharmacodynamics (renal threshold for glucose [RT_G], urinary glucose excretion [UGE_0–24h], and 24‐hour mean plasma glucose [MPG_0–24h]) of canagliflozin in subjects with type 2 diabetes. Thirty‐six randomized subjects received canagliflozin 50, 100, or 300 mg/day or placebo for 7 days. On Days 1 and 7, area under the plasma concentration‐time curve and maximum observed plasma concentration (C_max) for canagliflozin and its metabolites increased dose‐dependently. Half‐life and time at which C_max was observed were dose‐independent. Systemic molar M5 exposure was half that of canagliflozin; M7 exposure was similar to canagliflozin. Steady‐state plasma canagliflozin concentrations were reached by Day 4 in all active treatment groups. Pharmacodynamic effects were dose‐ and exposure‐dependent. All canagliflozin doses decreased RT_G, increased UGE_0–24h, and reduced MPG_0–24h versus placebo on Days 1 and 7. On Day 7, placebo‐subtracted least‐squares mean decreases in MPG_0–24h ranged from 42–57 mg/dL with canagliflozin treatment. Adverse events (AEs) were balanced between treatments; no treatment‐related serious AEs, AE‐related discontinuations, or clinically meaningful adverse changes in routine safety evaluations occurred. The observed pharmacokinetic/pharmacodynamic profile of canagliflozin in subjects with type 2 diabetes supports a once‐daily dosing regimen.