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Aims The objective of the present investigation was to examine the relationship of three polymorphisms, Thr394Thr, Gly482Ser and +A2962G, of the peroxisome proliferator activated receptor-γ co-activator-1 alpha (PGC-1α) gene with Type 2 diabetes in Asian Indians. Methods The study group comprised 515 Type 2 diabetic and 882 normal glucose tolerant subjects chosen from the Chennai Urban Rural Epidemiology Study, an ongoing population-based study in southern India. The three polymorphisms were genotyped using polymerase chain reaction–restriction fragment length polymorphism (PCR–RFLP). Haplotype frequencies were estimated using an expectation–maximization (EM) algorithm. Linkage disequilibrium was estimated from the estimates of haplotypic frequencies. Results The three polymorphisms studied were not in linkage disequilibrium. With respect to the Thr394Thr polymorphism, 20% of the Type 2 diabetic patients (103/515) had the GA genotype compared with 12% of the normal glucose tolerance (NGT) subjects (108/882) ( P = 0.0004). The frequency of the A allele was also higher in Type 2 diabetic subjects (0.11) compared with NGT subjects (0.07) ( P = 0.002). Regression analysis revealed the odds ratio for Type 2 diabetes for the susceptible genotype (XA) to be 1.683 (95% confidence intervals: 1.264–2.241, P = 0.0004). Age adjusted glycated haemoglobin ( P = 0.003), serum cholesterol ( P = 0.001) and low-density lipoprotein (LDL) cholesterol ( P = 0.001) levels and systolic blood pressure ( P = 0.001) were higher in the NGT subjects with the XA genotype compared with GG genotype. There were no differences in genotype or allelic distribution between the Type 2 diabetic and NGT subjects with respect to the Gly482Ser and +A2962G polymorphisms. Conclusions The A allele of Thr394Thr (G → A) polymorphism of the PGC-1 gene is associated with Type 2 diabetes in Asian Indian subjects and the XA genotype confers 1.6 times higher risk for Type 2 diabetes compared with the GG genotype in this population. [ABSTRACT FROM AUTHOR]