As the incidence and the public health impact of type 2 diabetes are constantly rising, treatment of hyperglycemia, prevention of diabetes-related complications are currently top medical priorities. Within the last decade several new classes of oral hypoglycemic agents were added to our armamentarium against diabetes. Among these new classes, the group of thiazolidinediones, which act through reduction of insulin resistance is perhaps the most widely used. For about 20 years, numerous background and clinical studies have evaluated the beneficial and adverse effects of these compounds. Current knowledge suggests that thiazolidinediones are as effective as metformin or sulfonylurea derivatives in improving glycemic control and exert several other beneficial metabolic and vascular effects, such as improvement in lipid profile, blood pressure lowering, redistribution of body fat away from the central compartment, microalbuminuria regression, reduction in subclinical vascular inflammation and others. On the other hand, currently used thiazolidinediones have well-established side effects, most important of which are fluid retention leading to weight gain and heart failure deterioration. Further, in the expectance of proper outcome studies to clarify the effects of these agents in cardiovascular morbidity and mortality, data from recent meta-analyses suggest that rosiglitazone may increase the risk for some cardiovascular outcomes. This article will discuss all the above issues attempting to provide an updated overview of this expanding field.