The effect of pioglitazone on splanchnic glucose uptake (SGU), endogenous glucose production (EGP), and hepatic fat content was studied in 14 type 2 diabetic patients (age 50 ± 2 years, BMI 29.4 ± 1.1 kg/m², HbA_1c 7.8 ± 0.4%). Hepatic fat content (magnetic resonance spectroscopy) and SGU (oral glucose load- insulin clamp technique) were quantitated before and after pioglitazone (45 mg/day) therapy for 16 weeks. Subjects received a 7-h euglycemic insulin (100 mU · m⁻² · min⁻¹) clamp, and a 75-g oral glucose load was ingested 3 h after starting the insulin clamp. Following glucose ingestion, the steady-state glucose infusion rate during the insulin clamp was decreased appropriately to maintain euglycemia. SGU was calculated by subtracting the integrated decrease in glucose infusion rate during the 4 h after glucose ingestion from the ingested glucose load. 3-[³H]glucose was infused during the initial 3 h of the insulin clamp to determine rates of EGP and glucose disappearance (R_d). Pioglitazone reduced fasting plasma glucose (10.0 ± 0.7 to 7.5 ± 0.6 mmol/l, P < 0.001) and HbA_1c (7.8 ± 0.4 to 6.7 ± 0.3%, P < 0.001) despite increased body weight (83 ± 3 to 86 ± 3 kg, P < 0.001). During the 3-h insulin clamp period before glucose ingestion, pioglitazone improved R_d (6.9 ± 0.5 vs. 5.2 ± 0.5 mg · kg⁻¹ · min^{− 1}, P < 0.001) and insulin-mediated suppression of EGP (0.21 ± 0.04 to 0.06 ± 0.02 mg · kg⁻¹ · min⁻¹, P < 0.01). Following pioglitazone treatment, hepatic fat content decreased from 19.6 ± 3.6 to 10.4 ± 2.1%, (P < 0.005), and SGU increased from 33.0 ± 2.8 to 46.2 ± 5.1% (P < 0.005). Pioglitazone treatment in type 2 diabetes 1) decreases hepatic fat content and improves insulin-mediated suppression of EGP and 2) augments splanchnic and peripheral tissue glucose uptake. Improved splanchnic/peripheral glucose uptake and enhanced suppression of EGP contribute to the improvement in glycemic control in patients with type 2 diabetes.