Two patients (a 48-year-old woman and a 62-year-old man) developed clinical and laboratory signs of hepatotoxicity due to troglitazone (Rezulin), a thiazolidinedione used in treatment of diabetes mellitus. There was no clear clinical evidence of drug allergy, although the woman experienced colitis before the onset of recognized hepatotoxicity. Liver biopsies showed bridging necrosis and fibrosis in the woman and hepatitis with granuloma formation in the man. The abnormalities in liver chemistries resolved promptly upon cessation of the drug. Cases involving 46 patients reported to the United States Food and Drug Administration are also reviewed. Troglitazone is a useful new oral antihyperglycemic agent, but in about 1.9% of patients hepatotoxicity has occurred, which may be severe and even fatal. Frequent monitoring of serum liver chemistries in patients taking the drug is essential.