Little is known about the metabolic or cardiovascular effects of selective ER modulators (SERMs), such as raloxifene hydrochloride (RLX), in postmenopausal women with type 2 diabetes mellitus (DM). Therefore, the effect of RLX vs. placebo (PL) on glycemic control, insulin sensitivity, as well as effects on a number of hormone, lipid, coagulation, and safety factors were determined in 30 postmenopausal women with type 2 DM in a randomized, double blind, cross-over trial. All participants had a SHBG serum concentration below 60 nmol/liter at baseline and had stable diabetes controlled by either oral hypoglycemic agents or diet for 1 month. In the first treatment period, participants received 12 wk of either PL or RLX, followed by an 8-wk washout before the second treatment period. In the second treatment period, participants were crossed over to the other treatment. Compared with PL, RLX did not significantly affect fasting blood glucose, hemoglobin A(1c), lipids, fasting insulin, or insulin sensitivity (as measured by the euglycemic clamp technique). Compared with PL, RLX reduced fibrinogen levels by 0.77 g/liter (P < 0.001), IGF-I by 2.4 nmol/liter (P < 0.001), and free T by 0.73 pmol/liter (P = 0.038) and increased SHBG by 5.5 nmol/liter (P = 0.001) and IGF-binding protein-3 by 0.57 ng/ml (P = 0.007). Our results demonstrate that RLX does not significantly affect glycemic control and has favorable or neutral effects on selected surrogate markers of cardiovascular risk in postmenopausal women with type 2 diabetes mellitus while decreasing hyperandrogenicity in these patients.