Hyperlipidaemia, in particular raised concentrations of serum triglycerides, together with raised plasma non‐esterified fatty acid concentrations, is common in patients with Type 2 (non‐insulin‐dependent) diabetes mellitus and may be associated with insulin insensitivity. Thirty non‐obese Type 2 diabetic patients (15 controlled with diet alone and 15 with diet plus oral sulphonylurea therapy) were therefore recruited to take part in a double‐blind, randomized, crossover comparison of acipimox (250 mg three times daily for 3 months) and placebo. Serum lipids, blood glucose control, insulin sensitivity, and glucose tolerance were measured before and after each treatment period. There was a significant decrease in serum triglycerides (2.05 ± 1.08 vs 2.91 ± 1.75: p < 0.005), cholesterol (5.66 ± 1.02 vs 6.26 ± 1.17: p = 0.0005), and apoprotein B (1.32 ± 0.23 vs 1.44 ± 0.25: p < 0.05) while HDL cholesterol and apoprotein A‐1 concentrations were unchanged. There was no change in blood glucose control measured by fasting glucose, insulin, and HBA₁ concentrations, but there was a significant improvement in insulin action assessed by glucose—insulin infusion. Although plasma non‐esterified fatty acid concentrations were lower during the oral glucose tolerance test after acipimox, there was no difference in either the peak or 2‐h plasma glucose concentrations and the total area under the glucose curve did not change. Acipimox was well tolerated and no patients withdrew from the study for drug‐related symptoms. Thus, acipimox effectively lowers serum cholesterol and triglycerides in patients with Type 2 diabetes without adversely altering blood glucose control, and appears to improve insulin sensitivity.