This 6 arm study will assess the efficacy, safety, tolerability and pharmacokinetics of aleglitazar therapy in patients with Type 2 diabetes. Patients will be randomised to one of 6 treatment arms, to receive one of 4 doses of aleglitazar, Actos as an open-label active comparator, or placebo. Aleglitazar will be administered starting from a dose of 0.05mg po daily, and Actos will be administered at a dose of 45mg once daily. The anticipated time on study treatment is 3-12 months, and the target sample size is 100-500 individuals.

Inclusion Criteria:

• adult patients, 18-75 years of age;
• type 2 diabetes, diagnosed >=1 month of screening;
• either drug-naive, or pretreated with a maximum of 2 oral antihyperglycemic agents at submaximal doses;
• HbA1c <=10.0% at screening, and 7.0-10.0% at pre-randomisation visit.

Exclusion Criteria:

• type 1 diabetes;
• currently or previously treated with insulin, a thiazolidinedione, or a dual Peroxisome Proliferator Activated Receptor (PPAR) agonist;
• clinically significant cardiovascular disease;
• Congestive Heart Failure (CHF) New York Heart Association (NYHA) 3-4.