Insulin resistance (IR)/hyperinsulinemia and low-grade inflammation (high-sensitivity C-reactive protein [hs-CRP]) can predict cardiovascular disease. However, because IR and inflammation (IF) have not been evaluated simultaneously, it is not known whether IR and IF are independently related to cardiovascular disease. Furthermore, the combined effect of IR and IF on the prediction of cardiovascular disease is presently unknown. Thus, we measured insulin sensitivity (K index of the insulin tolerance test; KITT) and hs-CRP in 350 Japanese patients with type 2 diabetes, and followed them for 1-7 years (mean, 4.5 years). During the follow-up, 33 patients died and 53 patients developed non-fatal coronary artery disease or stroke (endpoint). Age, systolic blood pressure, current smoking, past history of cardiovascular disease, KITT, and hs-CRP independently and significantly correlated with endpoint. One-S.D. difference was associated with a significant increase of relative risk in KITT (1.45; 95% CI 1.09-1.91) and hs-CRP (1.30; 1.04-1.67). When patients were subdivided to tertile, the relative risk in the highest tertile of KITT was 1.76 (95% CI 1.01-3.11) and hs-CRP was 2.00 (1.03-3.85) compared with the patients with lowest tertile. The relative risk in the highest tertile of both KITT and hs-CRP was 5.32 (1.18-24.0) compared with the lowest tertile of both values. In conclusion, low-grade IF and IR are independently related to all-cause of death and cardiovascular disease in Japanese patients with type 2 diabetes. Coexistence of low-grade IF and IR amplify this effect.