People with type 2 diabetes have a substantially increased risk of coronary heart disease (CHD). Short-term studies with unopposed oral estradiol in women with diabetes have suggested potentially beneficial effects on lipids, thrombotic factors, and insulin sensitivity. However, most (nonhysterectomized) postmenopausal women require combined estrogen-progesterone preparations. We randomized 43 women with type 2 diabetes either to continuous transdermal estradiol (80-microg patches) in combination with oral norethisterone (1 mg daily) or to identical placebos. Blood samples were taken before and after 6 months for measurement of lipoproteins, coagulation factors, and endothelial markers. Total cholesterol and triglyceride concentrations decreased by 8% and 22%, respectively, in those receiving hormone replacement therapy (P < 0.05 relative to change in placebo group after adjustment for baseline concentrations). There was a trend toward a reduction in high density lipoprotein cholesterol concentration (P = 0.06). Factor VII activity decreased by 16% (P < 0.001), and von Willebrand factor antigen decreased by 7% (P = 0.014) with active treatment. Levels of fibrinogen, tissue plasminogen activator, fibrin D dimer, very low density lipoprotein cholesterol, low density lipoprotein cholesterol, lipoprotein(a), and leptin were not significantly altered. No change in glycemic control was detected. Overall, lipid changes may be considered slightly beneficial with respect to CHD risk. The significant decrease in factor VII activity in this study is notable, because elevated factor VII activity has been associated with an increased risk of coronary thrombosis and normally increases with administration of oral estrogen-containing preparations. In addition, a reduction in von Willebrand factor antigen is consistent with an improvement in endothelial function. We suggest that the regimen used in this study may have the potential to reduce CHD risk in women with type 2 diabetes.