OBJECTIVE: Dietary carbohydrate is the major determinant of postprandial glucose levels, and several clinical studies have shown that low-carbohydrate diets improve glycemic control. In this study, we tested the hypothesis that a diet lower in carbohydrate would lead to greater improvement in glycemic control over a 24-week period in patients with obesity and type 2 diabetes mellitus. RESEARCH DESIGN AND METHODS: Eighty-four community volunteers with obesity and type 2 diabetes were randomized to either a low-carbohydrate, ketogenic diet (<20 g of carbohydrate daily; LCKD) or a low-glycemic, reduced-calorie diet (500 kcal/day deficit from weight maintenance diet; LGID). Both groups received group meetings, nutritional supplementation, and an exercise recommendation. The main outcome was glycemic control, measured by hemoglobin A1c. RESULTS: Forty-nine (58.3%) participants completed the study. Both interventions led to improvements in hemoglobin A1c, fasting glucose, fasting insulin, and weight loss. The LCKD group had greater improvements in hemoglobin A1c (-1.5% vs. -0.5%, p = 0.03), body weight (-11.1 kg vs. -6.9 kg, p = 0.008), and high density lipoprotein cholesterol (+5.6 mg/dL vs. 0 mg/dL, p < 0.001) compared to the LGID group. Diabetes medications were reduced or eliminated in 95.2% of LCKD vs. 62% of LGID participants (p < 0.01). CONCLUSION: Dietary modification led to improvements in glycemic control and medication reduction/elimination in motivated volunteers with type 2 diabetes. The diet lower in carbohydrate led to greater improvements in glycemic control, and more frequent medication reduction/elimination than the low glycemic index diet. Lifestyle modification using low carbohydrate interventions is effective for improving and reversing type 2 diabetes.