The rising incidence of obesity and insulin resistance to epidemic proportions has closely paralleled the surge in the prevalence of diabetes and outpaced therapeutic advances in diabetes prevention and treatment. Current evidence points to obesity induced oxidative stress and chronic inflammation as the common denominators in the evolution of insulin resistance and diabetes. Of all the hypoglycemic agents in the pharmacological arsenal against diabetes, thiazolidinediones, in particular pioglitazone, as well as metformin appear to have additional effects in ameliorating oxidative stress and inflammation; rendering them attractive tools for prevention of insulin resistance and diabetes. In addition to their hypoglycemic and lipid modifying properties, pioglitazone and metformin have been shown to exert anti-oxidative and anti-inflammatory effects in vascular beds, potentially slowing the accelerated atherosclerosis in diabetes, which is the major cause of morbidity and mortality in the affected population. The combination of pioglitazone and metformin would thus appear to be an effective pharmacological intervention in prevention and treatment of diabetes. Finally, this review will address the currently available evidence on diabetic cardiomyopathy and the potential role of combination therapy with pioglitazone and metformin.