Objectives: The most important fundamental pathology in type 2 diabetes is insulin resistance. Thiazolidinedione is one of the drugs of choice to combat the insulin resistance. Different studies show conflict about thiazolidinedione and its effect on liver functions. In this study, we weighed up the outcome of rosiglitazone on liver functions in type 2 diabetes. Materials and Methods: One hundred patients with type 2 diabetes taking rosiglitazone 4 mg daily were enrolled in this 2-month study. Biochemical parameters of liver and diabetes mellitus were estimated monthly during the treatment period of case and controls. Results: At starting point, difference between the Normal Liver Function (NLF) and Abnormal Liver Function (ABLF) groups in body mass index, fasting plasma glucose, hemoglobin A1c (HbA1c), and lipid profiles were not significant. After 3 month of the treatment, HbA1c was significantly lowered in both groups ( P = 0.0001). More importantly, serum concentrations of both serum glutamate oxaloacetate transferasease (SGOT), serum glutamate pyruvate transferasease (SGPT) and Gamma glutamryl transpeptidase (GGT) in the ABLF group decreased significantly (SGOT: 59.7---PlusMinusSymbol---21.9 to 49.7---PlusMinusSymbol---22.4U/L, P=