Background: Men with type 2 diabetes mellitus (T2D) often have lowered testosterone levels and an increased risk of cardiovascular disease (CVD). Ectopic fat increases the risk of CVD, whereas subcutaneous gluteofemoral fat protects against CVD and has a beneficial adipokine-secreting profile. Hypothesis: Testosterone replacement therapy (TRT) may reduce the content of ectopic fat and improve the adipokine profile in men with T2D. Design and methods: A randomized, double-blinded, placebo-controlled study in 39 men aged 50-70 years with T2D and bioavailable testosterone levels <7.3 nmol/L. Patients were randomized to TRT (n = 20) or placebo gel (n = 19) for 24 weeks. Thigh subcutaneous fat area (TFA, %fat of total thigh volume), subcutaneous abdominal adipose tissue (SAT, % fat of total abdominal volume) and visceral adipose tissue (VAT, % fat of total abdominal volume) were measured by magnetic resonance (MR) imaging. Hepatic fat content was estimated by single-voxel MR spectroscopy. Adiponectin and leptin levels were measured by in-house immunofluorometric assay. Coefficients (b) represent the placebo-controlled mean effect of intervention. Results: TFA (b = -3.3 percentage points (pp), P = 0.009), SAT (b = -3.0 pp, P = 0.006), levels of adiponectin (b = -0.4 mg/L, P = 0.045), leptin (b = -4.3 μg/mL, P < 0.001), leptin:adiponectin ratio (b = -0.53, P = 0.001) and HDL cholesterol (b = -0.11 mmol/L, P = 0.009) decreased during TRT compared with placebo. Hepatic fat content and VAT were unchanged. Conclusions: The effects of TRT on cardiovascular risk markers were ambiguous. We observed potentially harmful changes in cardiovascular risk parameters, markedly reduced subcutaneous fat and unchanged ectopic fat during TRT and a reduction in adiponectin levels. On the other hand, the decrease in leptin and leptin:adiponectin ratio assessments could reflect an amelioration of the cardiovascular risk profile linked to hyperleptinaemia in ageing men with T2D.