Thiazolidinediones are a powerful and clinically important new class of oral antidiabetic agents that act by improving insulin sensitivity. Troglitazone is the prototype drug in this class but was withdrawn from the market in March 2000 due to its association with idiosyncratic hepatotoxicity. Currently two thiazolidinediones, rosiglitazone and pioglitazone, are U.S. Food and Drug Administration (FDA) approved for treatment of type 2 diabetes. These agents bind to and activate peroxisome proliferator-activator receptor gamma (PPAR-gamma) and work by altering the expression of genes involved in glucose uptake, glucose disposal, and lipid metabolism. The drugs differ in receptor binding and potency due to differences in their side chain moieties. These agents are rapidly absorbed from the gastrointestinal tract and are metabolized mainly in the liver. Rosiglitazone is FDA approved for monotherapy and for use in combination therapy with metformin or sulfonylureas. Pioglitazone is FDA approved for monotherapy as well as for use in combination therapy with metformin, insulin, or sulfonylureas. These drugs may also cause significant changes in plasma lipid concentrations, and improved insulin sensitivity may improve ovulatory function and fertility in women with polycystic ovary syndrome. The most serious side effect of the thiazolidinediones is hepatotoxicity. Although rosiglitazone and pioglitazone were not associated with hepatotoxicity in premarketing clinical trials, there were two recent case reports of idiosyncratic hepatotoxicity in patients treated with rosiglitazone. In addition, these agents may be associated with edema and some hematological changes. The purpose of this review is to provide an overview of the two currently approved thiazolidinediones and to suggest an approach for their safe and rational use.