Pioglitazone has been shown to reduce fasting triglyceride levels. The mechanisms of this effect have not been fully elucidated, but decreased lipolysis may contribute to blunt the hypertriglyceridemic response to a meal. To test this hypothesis, we studied 27 T2DM patients and 7 gender-, age-, and BMI-matched nondiabetic controls. Patients were randomized to pioglitazone (45 mg/day) or placebo for 16 weeks. Whole-body lipolysis was measured (as the [²H₅]glycerol rate of appearance [Ra]) in the fasting state and for 6 hours following a mixed meal. As compared to controls, T2DM had higher postprandial profiles of plasma triglycerides, FFA, and -hydroxybutyrate, and a decreased suppression of glycerol Ra (p<0.04) despite higher insulin levels (268[156] vs 190[123] pmol/l, median[interquartile range]). Following pioglitazone, triglycerides and FFA were reduced (p=0.05 and p<0.04, respectively), and glycerol Ra was more suppressed (-40[137] vs +7[202] µmol.min^-1 of placebo, p<0.05) despite a greater fall in insulin (-85[176] vs -20[58] pmol/l, p=0.05). We conclude that, in well-controlled T2DM patients whole-body lipolysis is insulin resistant, and pioglitazone improves the insulin sensitivity of lipolysis.