 Skeletal muscle mitochondrial defects are a sine qua non of insulin resistance in patients with T2DM. Pioglitazone decreases free fatty acid levels and restores mitochondria number in adipose tissue whereas high fat diet and lipid infusion decreases genes involved in mitochondrial biogenesis. Increased lipid flux from diet or adipose tissue into skeletal muscle might be the cause of decreased mitochondrial biogenesis. The purpose of this study is to determine if 22 weeks treatment with Pioglitazone can increase mitochondrial biogenesis in muscle in 30 uncomplicated T2DM patients that were previously not taking TZDs. This Phase IV, randomized, double-blind, placebo controlled, clinical trial will consist of 3 phases: a screening, a placebo Pioglitazone phase 12 weeks and a weight loss period 6-10 weeks. The primary endpoint is to identify the changes in skeletal muscle mitochondria number and gene expression. Secondary endpoints include MRS measured mitochondrial capacity, insulin sensitivity for glucose disposal and insulin suppression of free fatty acids, electron transport chain activity, mitochondrial content and intra hepatic and intra myocellular lipid. Metformin and Sulfonylurea will be used as standardized oral therapy to maintain HbA1C 7.0. After completing the protocol, patients will be offered a very low calorie liquid diet 800kcald to assist them in losing weight. During this period they will continue on their previously randomized treatment. When patients lose 10 of their body weight, patients will be switched to a weight maintenance diet meal replacement with 1 can of glucerna at breakfast and lunch with a healthy dinner for 10 days. MRS measured mitochondrial capacity will again be determined to see if weight loss pioglitazone has more effect on mitochondrial function than pioglitazone alone. 