To determine the effect on glycemic control and lipid parameters of the 2.5 and 5 mg. doses of BMS-298585 in drug naive subjects with Type 2 diabetes as an adjunct to diet and exercise.

Inclusion Criteria:

• Subjects with Type 2 diabetes
• Drug Naive
• HbA1c >= 7.0% and <= 10.0%
• Body Mass Index <= 41 kg/m2
• Serum TG <= 600 mg/dL

Exclusion Criteria:

• Symptomatic Type 2 diabetes
• History of bladder cancer
• History of Myocardial Infarction (MI), coronary angioplasty or bypass grafts, valvular disease or repair, unstable angina pectoris, Transient Ischemic Attach (TIA), or Cerebrovascular Accident (CVA) within 6 months, congestive heart failure (NYHA Class II and IV), uncontrolled hypertension, history of renal disease, peripheral vascular disease (PVD), pulmonary disease, gastrointestinal disease, active liver disease or endocrine disease.