Nonalcoholic steatohepatitis (NASH) is a common chronic liver disease for which there is no known effective therapy. A proportion of patients with NASH progress to advanced fibrosis and cirrhosis. NASH is considered one of the clinical features of the metabolic syndrome in which insulin resistance plays a central role. This prospective study evaluates the role of insulin-sensitizing agent in treatment of NASH. Eighteen nondiabetic patients with biopsy-proven NASH were treated with pioglitazone (30 mg daily) for 48 weeks. Tests of insulin sensitivity and body composition as well as liver biopsies were performed before and at the end of treatment. By 48 weeks, serum alanine aminotransferase values fell to normal in 72% of patients. Hepatic fat content and size as determined by magnetic resonance imaging decreased, and glucose and free fatty acid sensitivity to insulin were uniformly improved. Histological features of steatosis, cellular injury, parenchymal inflammation, Mallory bodies, and fibrosis were significantly improved from baseline (all P < 0.05). Using strict criteria, histological improvement occurred in two-thirds of patients. Pioglitazone was well tolerated; the main side effects were weight gain (averaging 4%) and an increase in total body adiposity. In conclusion, these results indicate that treatment with an insulin-sensitizing agent can lead to improvement in biochemical and histological features of NASH and support the role of insulin resistance in the pathogenesis of this disease. The long-term safety and benefits of pioglitazone require further study.