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Oral anti-diabetes drugs plus basal insulin (OAD + insulin) therapy in patients with newly diagnosed type 2 diabetes might improve β-cell function and result in extended glycaemic remission. This randomised trial compared the effect on β-cell function and diabetes remission rate between oral drug alone or with addition of basal insulin.One hundred and twenty-nine patients, aged 35–50 years, were enrolled between June 2005 and June 2009. For initial correction of hyperglycaemia, patients with fasting plasma glucose ≥9.0 mmol/L and HbA1c ≥ 9.0%, were randomly assigned to therapy with oral drugs + insulin or oral drugs alone. Treatment was stopped after normoglycaemia was maintained for 3 months. Patients were then followed-up with diet and physical exercise. Blood glucose, HbA1c and insulin were measured prior to treatment and at 1-year follow-up.More patients achieved target glycaemic control in the oral drugs + insulin group [98.3% (58 of 59)] in less time [(10.4 ± 2.5) days] than those in the oral drug group [95.7% (67 of 70) and (12.4 ± 3.4) days]. At 1-year follow-up, more patients maintained target glycaemia without any drugs in the oral drug + insulin group than in the oral drug group [37.9% (22 of 58) vs 20.9% (14 of 67)]. Both treatments improved homeostasis model assessment-β (HOMA-β) and homeostasis model assessment-insulin resistance (HOMA-IR) significantly. They had similar effects on insulin resistance [lg(HOMA-IR): (0.50 ± 0.09) vs (0.48 ± 0.09), p = 0.23]. However, oral drugs + insulin could recover β-cell function much more than OAD alone could [lg(HOMA-β): (2.17 ± 0.14) vs (2.11 ± 0.13), p = 0.03].In newly diagnosed type 2 diabetes, therapy with oral drugs + insulin has had favourable outcomes on recovery and maintenance of β-cell function and protracted glycaemic remission compared with treatment with oral drugs alone. Copyright © 2011 John Wiley & Sons, Ltd.