We will prospectively study 2 groups of diabetic patients treated with pioglitazone or placebo for 26 weeks. Bone marrow aspirates will be obtained from these patients at baseline and after 26 weeks of treatment, and hBMCs will be isolated from these bone marrow aspirations. The ability of hBMCs to differentiate into osteoblast and adipocytes lineages will be compared before and after treatment with pioglitazone and compared to placebo. In parallel, clinical markers of bone formation and resorption as well as bone mineral density will be assessed before and after 26 weeks of treatment. Primary endpoint for this study will be detection of change in number of osteoblasts or adipocytes from cultured hBMCs between study groups and within each group.