The purpose of this study is to compare Muraglitazar and Pioglitazone in patients with Type 2 Diabetes. Both the safety and blood sugar lowering effects of these treatments will be studied.

Inclusion Criteria:

• Type 2 Diabetes
• HbA1c > = 8.0% and < = 12.0%
• Serum triglyceride concentration < = 600 mg/dL
• Fasting c-peptide > = 1.0 ng/ml
• Body mass index < = 41 kg/m2
• Drug naive patients

Exclusion Criteria:

• History of MI (myocardial infarction), coronary angioplasty or bypass graft(s), valvular disease or repair, unstable angina pectoris, transient ischemic attack (TIA), cerebrovascular accidents, accelerated/malignant hypertension, or hypertension related CHF (congestive heart failure) within six months prior to screening and during the Lead-In Phase.
• Women of child Bearing Potential
• Uncontrolled hypertension, CHF defined as New York Heart Association (NYHA) Class II, III and IV, exacerbation of previously stable CHF (any NYHA class) or uncontrolled cardiac arrhythmia in the 30 days prior to screening and during the Lead-In Phase.
• History of renal disease, bladder cancer, pulmonary disease, gastrointestinal disease, active liver disease or endocrine disease.