The peroxisome proliferator-activated receptor γ (PPARγ) has important effects on insulin sensitivity, obesity and diabetes. Pioglitazone improves insulin sensitivity by activating PPARγ. In view of inter-individual variability in therapeutic response to pioglitazone, this study was designed to search for an association between type 2 diabetes mellitus and Pro12Ala single-nucleotide polymorphism (SNP) in PPARγ (SNP rs1801282) and to investigate whether these genetic variants affect pioglitazone response in an Iranian population. A total of 101 patients with type 2 diabetes were treated for 12 weeks with pioglitazone (15 mg/day). Paraclinical parameters were measured before and after therapy. We genotyped 128 control participants without diabetes and all patients with type 2 diabetes. The Pro12Ala polymorphism in PPARγ was detected with real-time PCR. The Ala allele was found in 7% of the control participants vs. 3% of those with type 2 diabetes (P = 0.04). The genotypic frequencies of Pro/Ala were 14.06% in the former group vs. 5.94% in the latter (P = 0.036). There were significant changes in some laboratory values and biochemical markers of insulin sensitivity after pioglitazone therapy. The Pro12Ala polymorphism was associated with significant changes in insulin-to-glucose ratio after treatment (P = 0.015 and P = 0.005). Our findings suggest that in carriers of the 12Ala variant, pioglitazone significantly reduced the risk of type 2 diabetes, and in diabetic patients with the Pro12Ala genotype, the therapeutic response to treatment was better than in patients with the Pro12Pro genotype, although the difference between groups did not reach statistical significance.