We examined the effects of combined pioglitazone (peroxisome proliferator‐activated receptor‐γ (PPAR‐γ) agonist) and exenatide (GLP‐1 receptor agonist) therapy on hepatic fat content and plasma adiponectin levels in patients with type 2 diabetes (T2DM). Twenty‐one T2DM patients (age = 52 ± 3 years, BMI = 32.0 ± 1.5, hemoglobin A1c (HbA1c) = 8.2 ± 0.4%) on diet and/or metformin received additional treatment with either pioglitazone 45 mg/day for 12 months (n = 10) or combined therapy with pioglitazone (45 mg/day) and exenatide (10 µg subcutaneously twice daily) for 12 months (n = 11). At baseline, hepatic fat content and plasma adiponectin levels were similar between the two treatment groups. Pioglitazone reduced fasting plasma glucose (FPG) (P < 0.05), fasting free fatty acid (FFA) (P < 0.05), and HbA1c (Δ = 1.0%, P < 0.01), while increasing plasma adiponectin concentration by 86% (P < 0.05). Hepatic fat (magnetic resonance spectroscopy (MRS)) was significantly reduced following pioglitazone treatment (11.0 ± 3.1 to 6.5 ± 1.9%, P < 0.05). Plasma triglyceride concentration decreased by 14% (P < 0.05) and body weight increased significantly (Δ = 3.7 kg). Combined pioglitazone and exenatide therapy was associated with a significantly greater increase in plasma adiponectin (Δ = 193%) and a significantly greater decrease in hepatic fat (12.1 ± 1.7 to 4.7 ± 1.3%) and plasma triglyceride (38%) vs. pioglitazone therapy despite the lack of a significant change in body weight (Δ = 0.2 kg). Hepatic injury biomarkers aspartate aminotransferase and alanine aminotransferase (ALT) were significantly decreased by both treatments; however, the reduction in ALT was significantly greater following combined pioglitazone and exenatide therapy. We conclude that combined in patients with T2DM, pioglitazone and exenatide therapy is associated with a greater reduction in hepatic fat content as compared to the addition of pioglitazone therapy (Δ = 61% vs. 41%, P < 0.05).