Clinical drug trials are often conducted in selective patient populations, with relatively small numbers of patients, and a short duration of follow-up. Observational studies are therefore important for collecting additional information on adverse drug events (ADEs). Currently, there is no guidance regarding the methodology for measuring ADEs in such studies. Our aim was to evaluate whether the methodology used to assess non-serious ADEs in observational studies is adequate for detecting these ADEs, and for addressing limitations from clinical trials in patients with type 2 diabetes mellitus. We systematically searched MEDLINE and EMBASE for observational studies reporting non-serious ADEs (1999-2008). Methods to assess ADEs were classified as: 1) medical record review; 2) surveillance by health care professionals (HCP); 3) patient survey; 4) administrative data; 5) laboratory/clinical values; 6) not specified. We compared the range of ADEs identified, number and selection of patients included, and duration of follow-up. Out of 10,125 publications, 68 studies met our inclusion criteria. The most common methods were based on laboratory/clinical values (n = 25) and medical record review (n = 18). Solicited surveillance by HCP (n = 17) revealed the largest diversity of ADEs. Patient surveys (n = 15) focused mostly on hypoglycaemia and gastrointestinal ADEs, laboratory values based studies on hepatic and metabolic ADEs, and administrative database studies (n = 5) on cardiovascular ADEs. Four studies presented ADEs that were identified with the use of more than one method. The patient population was restricted to a lower risk population in 19% of the studies. Less than one third of the studies exceeded pre-approval regulatory requirements for sample size and duration of follow-up. We conclude that the current assessment of ADEs is hampered by the choice of methods. Many observational studies rely on methods that are inadequate for identifying all possible ADEs. Patient-reported outcomes and combinations of methods are underutilized. Furthermore, while observational studies often include unselective patient populations, many do not adequately address other limitations of pre-approval trials. This implies that these studies will not provide sufficient information about ADEs to clinicians and patients. Better protocols are needed on how to assess adverse drug events not only in clinical trials but also in observational studies.