Thiazolidinediones (TZDs) are relatively new agents for the treatment of type 2 diabetes. They act as agonists at the PPAR‐γ nuclear receptor and their therapeutic effects include decreased insulin resistance and hyperglycaemia, an improved plasma lipid, inflammation and pro‐coagulant profile, and amelioration of hypertension, microalbuminuria and hepatic steatosis. The most common side effects of TZDs include weight gain and oedema, with occasional reports of congestive heart failure (CHF). This review discusses the benefit–risk profile of TZDs in treating patients with type 2 diabetes, with particular reference to the heart. To provide context, we explore briefly the epidemiology and pathophysiology of heart failure in patients with type 2 diabetes, touch on the association of heart disease and cardiovascular mortality with antihyperglycaemic treatment modalities other than TZDs, and then focus on the effects of TZDs on the heart, cardiovascular risk factors and outcomes. We describe the cluster of host factors, which seems to predispose patients with type 2 diabetes to TZD‐induced or TZD‐exacerbated oedema and CHF and then provide an overview of the putative mechanisms of these TZD‐related side effects. We also propose that certain diuretics (amiloride and spironolactone), by targeting the distal nephron that expresses PPARγ in collecting duct cells, might be of benefit in ameliorating the fluid retention and oedema associated with TZDs.