To determine whether the antidiabetic action of troglitazone (TGZ), heretofore attributed to insulin sensitization, also involves protection of beta cells from lipoapoptosis, we treated prediabetic Zucker Diabetic Fatty rats with 200 mg/kg per day of TGZ. Their plasma-free fatty acids and triacylglycerol fell to 1.3 mM and 111 mg/dl, respectively, compared with 2.0 mM and 560 mg/dl in untreated controls. Their islet triacylglycerol content was 34% below controls. In islets of control rats, beta cells were reduced by 82% and the islet architecture was disrupted; beta-cell glucose transporter-2 was absent, 85% of their mitochondria were altered, and they were unresponsive to glucose. In treated rats, the loss of beta cells was prevented, as were the loss of beta cell glucose transporter-2, the mitochondrial alterations, and the impairment of glucose-stimulated insulin secretion. We conclude that the antidiabetic effect of TGZ in prediabetic Zucker Diabetic Fatty rats involves prevention of lipotoxicity and lipoapoptosis of beta cells, as well as improvement in insulin sensitivity.