Aims: Orlistat promotes weight loss in overweight and obese patients with Type 2 diabetes receiving hypoglycaemic treatment, but has not been investigated in patients with newly diagnosed and previously untreated Type 2 diabetes. We evaluated the efficacy of 24 weeks' treatment with orlistat, combined with a mildly reduced-calorie diet, on weight loss and glycaemic control in overweight and obese patients with newly diagnosed and previously untreated Type 2 diabetes. Methods: A total of 249 Chinese patients (body mass index 25-40 kg/m2) with recently diagnosed Type 2 diabetes were randomized to placebo (n = 124) or orlistat 120 mg (n = 125) three times daily; all patients followed a mildly reduced-calorie diet. Patients had HbA1c 6.5-8.5% (mean 7.3%) and had never received any glucose-lowering medication. Results: Orlistat-treated patients achieved significantly greater weight loss at the study end than placebo-treated patients (-5.4 vs. -2.4 kg; P < 0.0001). More orlistat than placebo patients lost ≥ 5% (60.5 vs. 26.8%; P < 0.0001) and > 10% of their body weight (20.2 vs. 4.9%; P = 0.0002). A significantly greater decrease in HbA1c from baseline was obtained with orlistat than placebo (-1.0 vs. -0.6%; P = 0.0008). Orlistat-treated patients achieved a significantly greater decrease in fasting plasma glucose (-1.3 vs.-0.5 mmol/l;P = 0.0003) and in the 2-h oral glucose tolerance test (-4.1 vs. -1.4 mmol/1; P < 0.0001) than placebo recipients. Also, more orlistat- than placebo-treated patients improved from diabetic status to normal or impaired glucose tolerance (44.3 vs. 32.5%; P = 0.0763) after 24 weeks. Orlistat also produced improvements in lipid profiles and waist circumference. Conclusions: In combination with a mildly reduced-calorie diet, orlistat significantly reduces body weight, and improves glycaemic control and several cardiovascular risk factors in overweight and obese Chinese patients with newly diagnosed Type 2 diabetes. © 2005 Diabetes UK.