The main purpose of this study is to help us understand the effects of diabetes medication Liraglutide on weight loss and hunger. The investigators have already determined what the highest tolerated dose of Liraglutide is through earlier human research studies. Liraglutide was approved by the FDA in January 2010 for treatment of diabetes.

The investigators will also study the following:

1. The impact of Liraglutide on brain responses to food
2. It's effect on physiological and mental performance
3. If its effect on the brain differs among obese and lean diabetic subjects.

This is a randomized, placebo controlled, cross-over, double-blinded study to assess the effects of liraglutide on brain activation in areas involved in cognitive control and reward during food visualization.

Study participation will span approximately 1.5-2 months. Subjects will learn to self-administer the medication and will have a total of 8 study visits plus one screening visit. The visits will include the following tests/procedures:

1. Vital signs (blood pressure, temperature, heart rate, breathing rate)
2. Height, weight and other body measurements like waist
3. Blood tests
4. Urine pregnancy test (women only)
5. Electrocardiogram (EKG)
6. Medical history
7. Physical exam
8. Body Composition tests
9. Study logs to record food intake and blood sugar
10. functional MRI

We plan to recruit a total of 24 subjects to be treated with placebo and liraglutide. We propose to enroll 12 obese diabetic (type 2) and 12 lean diabetic (type 2) subjects. Equal numbers of men and women will be enrolled and the randomization will block for gender.

Inclusion Criteria:

Subjects will be men and women between the ages of 18 and 65. The following table list inclusion criteria for each group (lean diabetic and obese diabetic). Subjects must meet either HbA1c or fasting plasma glucose (FPG) criteria.

Lean diabetic:

BMI: 18-25 kg/m2 HbA1c: < 8.9% Fasting plasma glucose: <250 mg/dL Other inclusion criteria: On dietary modification and/or metformin

Obese diabetic:

BMI: >27 kg/m2 HbA1c: < 8.9% Fasting plasma glucose: <250 mg/dL Other inclusion criteria: On dietary modification and/or metformin

Additionally, women participants must use double barrier methods to prevent pregnancy (diaphragm with intravaginal spermicide, cervical cap, male or female condom with spermicide). If a woman suspects that she has become pregnant at any time or does not use one of the contraceptive methods recommended by the investigator, she must notify the study staff. If a woman becomes pregnant, she will be withdrawn from the study. The study staff will follow the progress of her pregnancy and the birth of her child.

Exclusion Criteria:

1. Uncontrolled diabetes (HbA1c>8.9%, or FPG>250 mg/dL)
2. Women who are breastfeeding, pregnant, or wanting to become pregnant.
3. Women using IUD
4. Any change in the dosage of hormonal contraceptive medications (birth control pills, implanon). Subjects should remain on same medication/ same dose during the time of the entire study.
5. Moderate (creatinine clearance of 30-59 ml/min) and severe renal impairment (creatinine clearance below 30 ml/min) and end-stage renal disease
6. Moderate, or severe hepatic impairment
7. Hypersensitivity to the active substance or any of the excipients in liraglutide
8. History of diabetic ketoacidosis
9. Congestive heart failure
10. Inflammatory conditions like inflammatory bowel disease, Rheumatoid arthritis etc
11. Gastroparesis
12. Pancreatitis
13. Gallstones- as they may cause increased risk of pancreatitis
14. Alcohol consumption- the maximum quantity for men is 140g-210g per week. For women, the range is 84g-140g per week or drinking as consuming no more than two drinks a day for men and one for women. Alcohol can cause increased risk of pancreatitis and hypoglycemia.
15. Untreated thyroid disease like hypothyroidism or hyperthyroidism
16. Subjects taking the following medications: warfarin, steroids (inhaled or systemic due to reduced hypoglycemic effect), and subjects on other hormones (LHRH analogs etc).
17. Subjects on any oral anti-diabetic agent except metformin
18. Personal or family history of MEN II or medullary thyroid cancer
19. Subjects with any type of bioimplant activated by mechanical, electronic, or magnetic means (e.g. cochlear implants, pacemakers, neuron or biostimulators, electronic infusion pumps, etc.)
20. Subjects with any type of metallic implant that could potentially be displaced or damaged during MRI, such as aneurysm clips, metallic skull plates, surgical implants etc. or metal containing tattoos
21. Anxiety and/or claustrophobia
22. Uncontrolled cardiac impairment, circulatory impairment, or inability to perspire (poor thermoregulatory function)
23. Significant sensory or motor impairment
24. Epilepsy, particularly photo-sensitive epilepsy, which may place the individual at a higher risk for adverse events during fMRI scanning with visual stimulation
25. Subjects with neurological problems which may interfere with or complicate testing (e.g. presence of titubation)
26. Body weight above the limitation of the MRI scanning table (330lbs/150 Kg) or body dimensions that could difficult the performance of the scan.
27. Subjects who cannot adhere to the experimental protocol for any reason
28. Anemia with Hgb less than 10
29. Uncontrolled infectious diseases (e.g. HIV, hepatitis, chronic infections etc)
30. Any uncontrolled endocrine condition, e.g Cushing's, Acromegaly, etc
31. Any cancers or lymphoma
32. Eating disorders like anorexia, bulimia
33. Severe hypertriglyceridemia (triglycerides >500 mg/dl)
34. Weight loss surgery or gastrectomy
35. Any changes in medications that affect brain function, e.g. anti-depressants, anti-psychotics, anti-anxiety, anti-seizure medications, antihypertensives etc (subjects should remain on same medication/ same dose during the time of the entire study).
36. Irregular periods, defined as cycle length less than 22 days or more than 40 days.
37. Any change in smoking status.
38. Vegetarians- as food images presented will include numerous non-vegetarian items and thus will not be appealing as high calorie food items.

Throughout the study (4 visits in each phase of liraglutide and placebo).

There was a systematic assessment of adverse events at each visit (Days 0, 7, 14, and 17) by an MD who asked detailed medical questions and did a physical exam, plus through the use of visual analog scales administered 3 times per day where participants answered on a 10cm line questions such as "How nauseous do you feel right now?"