1. The antihyperglycaemic effect and the possible mechanism of action of T-174, a novel thiazolidinedione derivative, was determined in vivo and in vitro. 2. Oral administration of T-174 markedly improved hyperglycaemia, hyperinsulinaemia, hyperlipidaemia, and glucose intolerance in genetically obese and diabetic yellow KK (KK-Ay) mice (0.2-15.5 mg kg(-1) day(-1), for 7 days) and Zucker fatty rats (1.4-11.4 mg kg(-1) day(-1), for 6 days). The ED50 values for the glucose lowering action of T-174 and pioglitazone, another thiazolidinedione antidiabetic, were 1.8 and 29 mg kg(-1) day(-1), respectively in KK-Ay mice; T-174 was about 16 times more potent than pioglitazone. 3. The hypoglycaemic effect of exogenous insulin in KK-Ay mice was enhanced after the administration of T-174. A hyperinsulinaemic euglycaemic clamp study in Zucker fatty rats showed an amelioration of whole-body insulin resistance by the T-174 treatment. 4. Insulin-stimulated glucose metabolism was enhanced in adipocytes from KK-Ay mice treated with T-174. The insulin receptor number of the adipocytes was increased without a change in the affinity of the receptor. 5. The hypomagnesaemia in KK-Ay mice was completely restored by T-174. 6. In cultured L6 myotubes, glucose consumption and [3H]-2-deoxy-glucose transport were enhanced by T-174 (EC50; 6 and 4 microM, respectively). Combination of insulin with T-174 was additive to stimulate glucose disposal. 7. These results suggest that the antihyperglycaemic effect of T-174 was mediated by enhanced insulin action. This was associated with amelioration of the hypomagnesaemia and T-174 directly increased basal and insulin-stimulated glucose utilization by cultured muscle cells.