We analysed participants with type 2 diabetes (n = 46) within a larger weight loss trial (n = 146) who were randomized to 48 weeks of a low-carbohydrate diet (LCD; n = 22) or a low-fat diet + orlistat (LFD + O; n = 24). At baseline, mean body mass index (BMI) was 39.5 kg/m2 (s.d. 6.5) and haemoglobin A1c (HbA1c) 7.6% (s.d. 1.3). Although the interventions reduced BMI similarly (LCD −2.4 kg/m2; LFD + O −2.7 kg/m2, p = 0.7), LCD led to a relative improvement in HbA1c: −0.7% in LCD versus +0.2% in LFD + O [difference −0.8%, 95% confidence interval (CI) = −1.6, −0.02; p = 0.045]. LCD also led to a greater reduction in antiglycaemic medications using a novel medication effect score (MES) based on medication potency and total daily dose; 70.6% of LCD versus 30.4% LFD + O decreased their MES by ≥50% (p = 0.01). Lowering dietary carbohydrate intake demonstrated benefits on glycaemic control beyond its weight loss effects, while at the same time lowering antiglycaemic medication requirements.