Aims To compare the efficacy and tolerability of the dipeptidyl peptidase-4 inhibitor, vildagliptin, with the alpha glucosidase inhibitor, acarbose, in drug-naive patients with Type 2 diabetes. Methods This multi-centre, randomized, double-blind, parallel-arm study compared the efficacy and tolerability of vildagliptin (100 mg daily, given as 50 mg twice daily, n = 441) and acarbose (up to 300 mg daily, given as three equally divided doses, n = 220) during 24-week treatment in drug-naive patients with Type 2 diabetes. Results Monotherapy with vildagliptin or acarbose decreased glycated haemoglobin (HbA(1c)) (baseline approximate to 8.6%) to a similar extent during 24-week treatment. The adjusted mean change from baseline to end-point (AM Delta) in HbA(1c) was -1.4 +/- 0.1% and -1.3 +/- 0.1% in patients receiving vildagliptin and acarbose, respectively, meeting the statistical criterion for non-inferiority (upper limit of 95% confidence interval for between-treatment difference <= 0.4%). The decrease in fasting plasma glucose was similar with acarbose (-1.5 +/- 0.2 mmol/l) and vildagliptin (-1.2 +/- 0.1 mmol/l). Body weight did not change in vildagliptin-treated patients (-0.4 +/- 0.1 kg) but decreased in acarbose-treated patients (-1.7 +/- 0.2 kg, P < 0.001 vs. vildagliptin). The proportion of patients experiencing any adverse event (AE) was 35% vs. 51% in patients receiving vildagliptin or acarbose, respectively; gastrointestinal AEs were significantly more frequent with acarbose (25.5%) than vildagliptin (12.3%, P < 0.001). No hypoglycaemia was reported for either group. Conclusions Vildagliptin is effective and well tolerated in patients with Type 2 diabetes, demonstrating similar glycaemic reductions to acarbose, but with better tolerability.