Background: In this era of evidence-based medicine, clinicians require a comprehensive range of welldesigned studies to support prescribing decisions and patient management. In recent years, data from observational studies have become an Increasingly important source of evidence because of improvements in observational-study methods and advances in statistical analysis. Objective: This article reviews the current literature and reports some of the key studies indicating that observational studies can both complement and build on the evidence base established by randomized controlled trials (RCTs). Methods: A literature search using the MEDLINE/ PubMed database (years: 1966-present) was carried out using the search terms observational or observational study(ies), historical control, nonrandomized, and postmarketing surveillance. All references comparing observational studies with randomized controlled trials were obtained and reviewed and were also hand-checked for studies not identified in the database searches. Results: Observational studies play an important role in investigating treatment outcomes. Data from large observational studies can clarify the tolerability profile of marketed medicines. In particular, observational studies can be of benefit in the study of large, heterogeneous patient populations with complex, chronic diseases such as diabetes mellitus. Observational studies have played a key role in supporting the results of Phase III studies of insulin analogues for the treatment of patients with type 1 and type 2 diabetes. Future observational studies in the field of diabetes such as PREDICTIVE (TM) (Predictable Results and Experience in Diabetes through Intensification and Control to Target: an International Variability Evaluation) and IMPROVE (TM) Will further our understanding of this global pandemic. Conclusions: Well-designed observational studies can play a key role in supporting the evidence base for drugs and therapies. Current evidence suggests that observational studies can be conducted using the same exacting and rigorous standards as are used for RCTs. The observational study design should be considered as a complementary rather than a rival analytic technique. (Clin Ther. 2007;29(Theme Issue): 1284-1292) Copyright (c) 2007 Excerpta Medica, Inc.