Background & aims: Hepatic encephalopathy in cirrhosis is contributed to by toxic products deriving from the proteolytic bacterial flora-related degradation of dietary nitrogen substances. Acarbose is a novel hypoglycemic agent acting through the inhibition of glucose absorption in the gut and the promotion of intestinal saccharolytic bacterial flora at the expense of proteolytic flora. We assessed whether acarbose exerts a beneficial effect on hepatic encephalopathy and on postprandial hyperglycemia in cirrhotic patients with low-grade hepatic encephalopathy and type 2 diabetes mellitus. Methods: One hundred seven cirrhotic patients with grade 1-2 hepatic encephalopathy and type 2 diabetes mellitus were randomized to acarbose 100 mg 3 times daily or placebo for 8 weeks; after a 2-week washout period, treatments were switched, and patients were followed for 8 more weeks. Ammonia blood levels, Reitan's number connection test, intellectual function, fasting and postprandial glucose levels, glycated hemoglobin values, and C peptide values were determined 2 weeks before and 4, 8, 11, 14, and 18 weeks after treatment. Results: (1) Acarbose significantly decreased ammonia blood levels and improved Reitan's test score and intellectual function score compared with placebo (P < .01). (2) Acarbose caused a 33% decrease in fasting glucose level and an approximately 50% decrease in postprandial glucose level compared with placebo (P < .01). (3) Acarbose significantly lowered glycated hemoglobin values and postprandial C peptide compared with baseline values, whereas placebo did not. (4) No change in biochemical parameters of liver function was observed after acarbose treatment. Conclusions: Acarbose is a safe and effective drug in cirrhotic patients with low-grade hepatic encephalopathy and type 2 diabetes mellitus.