OBJECTIVES: Outcomes in type 2 diabetes patients can differ based on the antidiabetic medication that is used. Thiazolidinediones (TZD) are a newer class of agents used for type 2 diabetes treatment. Previously, no study has compared healthcare utilization associated with the two TZDs on the market. The objective of this study was to compare healthcare utilization between two TZDs used by Medicaid-enrolled patients with type 2 diabetes. METHODS: This was a retrospective data analysis comparing cohorts of patients with type 2 diabetes starting a new antidiabetic medication for hospitalizations, emergency room visits, outpatient visits, and health care costs. A total of 660 patients starting rosiglitazone between July 1, 2001 to June, 30, 2002 were compared to 1045 patients staring pioglitazone during the same period. The patients were followed up for 30 months to examine the difference in healthcare utilization over time. Multivariate regression techniques were employed for comparisons between different antidiabetic therapies. RESULTS: Multivariate analysis showed that rosiglitazone group was associated with almost 12% decrease in the mean number of hospitalizations, and 10 % decrease in the mean number of emergency room visits, and a 7.3% decrease in total healthcare costs as compared to the pioglitazone group (all p<0.05). CONCLUSION: Introduction of rosiglitazone was associated with decreased number of hospitalizations, emergency room visits, and total healthcare costs compared to pioglitazone. The utilization of oral antidiabetic agents, with documented clinical and economic benefits, should continue to be advocated to reduce avoidable medical care utilization, and improve patient outcomes in this population.