Type 2 diabetes is reaching epidemic proportions worldwide, fueled by the increasing prevalence of obesity as many populations adopt a western lifestyle. Secondary complications affecting both the microvascular and macrovascular systems are responsible for premature mortality in Type 2 diabetes, with two thirds or more dying of cardiovascular disease. Two interacting metabolic defects, insulin resistance and beta-cell dysfunction are present in Type 2 diabetes. It is now recognised that insulin resistance is central to a cluster of metabolic abnormalities--called the insulin resistance syndrome--that are responsible for the excess of cardiovascular disease. Older antidiabetic agents such as the sulfonylureas, metformin and insulin are more effective than lifestyle modification in reducing microvascular complications of Type 2 diabetes, but overall do not reduce cardiovascular risk. Metformin, although no more effective as a glucose-lowering agent than sulfonylureas or insulin, does significantly reduce cardiovascular disease, probably as a result of its weak insulin-sensitising action. The newly-marketed thiazolidinedione insulin-sensitising antidiabetic agents also improve multiple biomarkers of cardiovascular risk, suggesting that novel approaches to insulin sensitisation will not only provide effective long-term glycaemic control but improve cardiovascular outcomes in Type 2 diabetes. Multiple therapeutic targets within the insulin signalling cascade are being explored, together with follow-up compounds to the first generation thiazolidinediones. These initiatives, together with developments in beta(3)-adrenoceptor agonists, 11 beta-hydroxysteroid dehydrogenase Type 1 inhibitors and modulators of the glucagon-like peptide 1 axis, all of which also potentially enhance insulin sensitivity, are critically evaluated.