Aims The effects of sitagliptin and pioglitazone, alone and in combination, on alpha- and beta-cell function were assessed in patients with type 2 diabetes. Methods Following a 6-week diet/exercise period, 211 patients with HbA1c of 6.5-9.0% and fasting plasma glucose of 7.2-14.4mmol/l were randomized (1:1:1:1) to sitagliptin, pioglitazone, sitagliptin+pioglitazone or placebo. At baseline and after 12 weeks, patients were given a mixed meal followed by frequent blood sampling for measurements of glucose, insulin, C-peptide and glucagon. Results After 12weeks, 5-h glucose total area under the curve (AUC) decreased in all active treatments versus placebo; reduction with sitagliptin + pioglitazone was greater versus either monotherapy. The 5-h insulin total AUC increased with sitagliptin versus all other treatments and increased with sitagliptin + pioglitazone versus pioglitazone. The 3-h glucagon AUC decreased with sitagliptin versus placebo and decreased with sitagliptin + pioglitazone versus pioglitazone or placebo. phi(s), a measure of dynamic beta-cell responsiveness to above-basal glucose concentrations, increased with either monotherapy versus placebo and increased with sitagliptin + pioglitazone versus either monotherapy. The insulin sensitivity index (ISI), a composite index of insulin sensitivity, improved with pioglitazone and sitagliptin + pioglitazone versus placebo. The disposition index, a measure of the relationship between beta-cell function and insulin sensitivity, improved with all active treatments versus placebo. Conclusions Sitagliptin and pioglitazone enhanced beta-cell function (increasing postmeal phi(s)), and sitagliptin improved alpha-cell function (decreasing postmeal glucagon) after 12weeks in patients with type 2 diabetes. Through these complementary mechanisms of action, the combination of sitagliptin and pioglitazone reduced postmeal glucose more than either treatment alone.