The objective of the study is to determine the dose(s) of Ro 205-2349 which, when compared to placebo, are efficacious, safe and tolerable in improving glycemic control in patients with type 2 diabetes. Doses of 5 to 20 mg/day will be studied.

Inclusion Criteria:

• Age 35 to 75
• Type 2 diabetes for longer than 3 months
• HbA1c (glycosylated hemoglobin A1c) greater than 7.0% at screening
• FPG (fasting plasma glucose) greater than 126 mg/dL at screening
• BMI (body mass index) less than 40 kg/square meter

Exclusion Criteria:

• Type I diabetes
• Type 2 diabetes patients currently treated with insulin
• Type 2 diabetes patients currently or previously treated with Actos, Avandia or Rezulin
• FPG (fasting plasma glucose) greater than 270 mg/dL at baseline
• Impaired liver or kidney function
• Triglycerides greater than 600 mg/dL
• Uncontrolled hypertension
• Pregnant or lactating women
• Women not using adequate contraception