This multicenter, randomized, double-blind, placebo-controlled study will evaluate the efficacy, safety and tolerability of aleglitazar in combination with metformin in patients with Type 2 diabetes mellitus who are inadequately controlled with metformin monotherapy. Patients will be randomized to receive either aleglitazar 150 mcg orally daily or placebo for 26 weeks in combination with their pre-existing metformin regimen and dose.