We examined the effect of pioglitazone (PIO) on circulating adipocytokine levels to elucidate the mechanisms by which thiazolidinediones improve insulin resistance in type 2 diabetes mellitus (T2DM). Twenty-three subjects with T2DM (age 54 +/- 2 yr, body mass index 29 +/- 1 kg/m(2)) were randomly assigned to receive placebo (n = 11) or PIO, 45 mg/d (n = 12), for 4 months. Before and after treatment, subjects received a 75-g oral glucose tolerance test (OGTT); euglycemic insulin clamp (40 mU/m(2).min) with 3-(3)H-glucose; determination of fat mass ((3)H(2)O); and measurement of fasting glucose, free fatty acids (FFAs), leptin, adiponectin, and TNFalpha concentrations. After 4 months of PIO, fasting plasma glucose concentration (Delta = -2.7 mol/liter), mean plasma glucose during OGTT (Delta = -3.8 mol/liter), and hemoglobin A(1c) (Delta = 1.7%) decreased (P < 0.05 vs. placebo) without change in fasting or post-OGTT plasma insulin levels. Fasting FFAs (Delta = 168 micromol/liter) and TNFalpha (Delta = 0.7 pg/ml) concentrations decreased (P < 0.05 vs. placebo), whereas adiponectin (Delta = 8.7 microg/ml) increased (P < 0.01 vs. placebo). Despite the increase in body fat mass (Delta = 3.4 kg) after PIO, plasma leptin concentration did not change significantly. No changes in plasma glucose, FFAs, or adipocytokine levels were observed in placebo-treated subjects. During the insulin clamp, endogenous (hepatic) glucose production decreased (Delta = -2.67 micromol/fat-free mass.min, P < 0.05 vs. placebo), whereas metabolic clearance rate of glucose (MCR) increased (Delta = 0.58 ml/fat-free mass.min, P < 0.05 vs. placebo) after PIO. In all subjects, before and after PIO, the decrease in plasma FFA concentration was correlated with the changes in both endogenous (hepatic) glucose production (r = 0.47, P < 0.05) and MCR (r = -0.41, P < 0.05), whereas the increase in plasma adiponectin concentration was correlated with the change in endogenous (hepatic) glucose production (r = -0.70, P < 0.01) and MCR (r = 0.49, P < 0.05). These results suggest that the direct effects of PIO on adipose tissue to decrease plasma FFA levels and increase plasma adiponectin contribute to the improvements in hepatic and peripheral insulin sensitivity and glucose tolerance in patients with T2DM.