Inclusion Criteria:

1. Signed and dated written Informed Consent (IC) by date of Visit 1a in accordance with GCP and local legislation
2. Patients with a diagnosis of type 2 diabetes mellitus and treatment naive or previously treated with any oral hypoglycaemic agent; antidiabetic therapy has to be unchanged for ten weeks prior to informed consent.
3. Glycosylated haemoglobin A1 (HbA1c) 7.5-11% at Visit 2 (Start of Run-in).
4. Male and female patients aged > or = 18 and < or = to 80 years at Visit 1a (Screening).
5. Body Mass Index (BMI) < or = 40 kg/m2 at Visit 1a (Screening)
6. Signed and dated written informed consent prior to admission to the study in accordance with GCP and local legislation.

Exclusion Criteria:

1. Myocardial infarction, stroke or TIA within 6 months prior to IC
2. Impaired hepatic function, defined by serum levels of either ALT (SGPT), AST (SGOT), or alkaline phosphatase above 3 x upper limit of normal (ULN) determined at Visit 1a.
3. Known hypersensitivity or allergy to the investigational product or its excipients and/or to hydrochloride of pioglitazone or its excipients
4. Treatment with GLP-1 analogue / agonist within 3 months prior to IC.
5. Treatment with insulin within 3 months prior to IC
6. Treatment with anti-obesity drugs 3 months prior to IC.
7. Alcohol abuse within the 3 months prior to IC that would interfere with trial participation or drug abuse.
8. Participation in another trial with an investigational drug within 2 months prior to IC.
9. Fasting blood glucose > 240 mg/dl (=13.3 mmol/L) at screening (Visit 1).

10. Pre-menopausal women (last menstruation < or =1 year prior to signing IC) who:

    • are nursing or pregnant,
    • or are of child-bearing potential and are not practicing an acceptable method of birth control, or do not plan to continue using this method throughout the study and do not agree to submit to periodic pregnancy testing during participation in the trial. Acceptable methods of birth control include transdermal patch, intra uterine devices/systems (IUDs/IUSs), oral, implantable or injectable contraceptives, sexual abstinence and vasectomised partner. No exception will be made.
11. Treatment with systemic steroids or change in the dosage of thyroid hormone within six weeks prior to IC
12. Heart failure NYHA class I-IV, or history of heart failure.
13. Diabetic ketoacidosis within 6 months prior to IC.
14. Hemodialyzed patients due to limited experience with TZDs
15. Any other clinical condition wich, in the opinion of the investigator, would not alow safe completion of the protocol and safe administration of BI 1356 and pioglitazone.