Type 2 diabetes mellitus is a chronic metabolic disorder that results from defects in both insulin secretion and insulin action. An elevated rate of basal hepatic glucose production in the presence of hyperinsulinemia is the primary cause of fasting hyperglycemia; after a meal, impaired suppression of hepatic glucose production by insulin and decreased insulin-mediated glucose uptake by muscle contribute almost equally to postprandial hyperglycemia. In the United States, five classes of oral agents, each of which works through a different mechanism of action, are currently available to improve glycemic control in patients with type 2 diabetes. The recently completed United Kingdom Prospective Diabetes Study (UKPDS) has shown that type 2 diabetes mellitus is a progressive disorder that can be treated initially with oral agent monotherapy but will eventually require the addition of other oral agents, and that in many patients, insulin therapy will be needed to achieve targeted glycemic levels. In the UKPDS, improved glycemic control, irrespective of the agent used (sulfonylureas, metformin, or insulin), decreased the incidence of microvascular complications (retinopathy, neuropathy, and nephropathy). This review examines the goals of antihyperglycemic therapy and reviews the mechanism of action, efficacy, nonglycemic benefits, cost, and safety profile of each of the five approved classes of oral agents. A rationale for the use of these oral agents as monotherapy, in combination with each other, and in combination with insulin is provided.