This is a 24-week randomized, double-blind, multi-center, active-controlled (pioglitazone) study of tesaglitazar (0.5 mg and 1 mg) in patients with type 2 diabetes, not adequately controlled on diet and lifestyle advice alone during the run-in period. The study comprises a 3-week enrollment period, 6 week placebo single blind run in period followed by a 24-week double blind treatment period and a 3-week follow-up period.