Individuals with diabetes mellitus have an increased risk of developing heart failure, usually as a consequence of coronary artery disease, although a specific diabetic cardiomyopathy, secondary to a microangiopathy, may also exist. The thiazolidinediones, a relatively new class of insulin-sensitizing agents used in the management of type 2 diabetes mellitus, have a number of complex metabolic actions on surrogate markers of atherogenesis, supported by the results of the recently published PROACTIVE (PROspective pioglitAzone Clinical Trial In macroVascular Events) trial. Unfortunately, the use of thiazolidinediones in individuals with diabetes mellitus and heart failure is limited because of a propensity to cause fluid retention. The underlying mechanisms of fluid retention have yet to be fully elucidated, but appear to be a dose-related class effect, exacerbated by combination therapy with insulin, and in some cases may be localized to peripheral edema. In parallel, echocardiographic studies show no significant effect of thiazolidinediones on cardiac structure or function. The design of epidemiologic studies describing an increased risk of developing heart failure in individuals with type 2 diabetes mellitus prescribed thiazolidinediones has been questioned, and a study of 'new users' of antihyperglycemic treatments found no increased risk of hospitalization for heart failure with thiazolidinedione therapy. There is also increasing evidence for the potential benefits of insulin sensitization in patients with diabetes mellitus and known heart failure, and a large observational study of over 16 000 patients with a principal discharge diagnosis of heart failure found a reduced mortality (hazard ratio [HR] 0.87; 95% CI 0.80, 0.94) in those prescribed thiazolidinediones. This benefit was offset by an increased risk of readmission with heart failure (HR 1.06; 95% CI 1.00, 1.09). Despite an increase in fluid-related events, recent studies suggest that individuals with type 2 diabetes mellitus and heart failure (New York Heart Association grade I/II) can be treated with thiazolidinediones with appropriate monitoring and adjustment of heart failure therapies. These findings would suggest the need for large-scale, prospective trials to investigate the safety and potential benefits of thiazolidinedione use in patients with diabetes mellitus and heart failure.