This study will use Magnetic Resonance Imaging (MRI) techniques to evaluate changes in fluid volume in the lower legs of diabetic patients who add either pioglitazone or placebo to their current diabetic regimen.

Inclusion criteria:

• Must have been diagnosed with Type 2 diabetes at least three months prior to screening.
• Must be taking either metformin and a sulfonylurea, metformin and insulin, or insulin only, and doses of these medications must have been stable for at least three months.
• Must have a Body Mass Index (BMI) of between 24 and 35.
• If female, the subject must be post-menopausal.
• HbA1c levels must be between 7% and 10%.
• Subjects must be eligible for MRI scanning (ie, no metal implants, pacemaker, etc).

Exclusion criteria:

• Suffer from claustrophobia.
• Use of tobacco, nicotine, or illegal drugs of abuse.
• Use of caffeine within two days prior to each study visit.
• HIV, hepatitis, edema, untreated blood pressure problems, heart, lung, nervous system or kidney disease, history of blood clots in the legs, diabetic neuropathy, or untreated thyroid disease.
• Use of drugs or medications that affect the levels of fluid in the body, such as diuretics.