Men who are overweight or obese frequently have low serum testosterone concentrations, which are associated with increased risk of type 2 diabetes. We aimed to determine whether testosterone treatment prevents progression to or reverses early type 2 diabetes, beyond the effects of a community-based lifestyle programme.T4DM was a randomised, double-blind, placebo-controlled, 2-year, phase 3b trial done at six Australian tertiary care centres. Men aged 50-74 years, with a waist circumference of 95 cm or higher, a serum testosterone concentration of 14·0 nmol/L or lower but without pathological hypogonadism, and impaired glucose tolerance (oral glucose tolerance test [OGTT] 2-h glucose 7·8-11·0 mmol/L) or newly diagnosed type 2 diabetes (provided OGTT 2-h glucose ≤15·0 mmol/L) were enrolled in a lifestyle programme and randomly assigned (1:1) to receive an intramuscular injection of testosterone undecanoate (1000 mg) or placebo at baseline, 6 weeks, and then every 3 months for 2 years. Randomisation was done centrally, including stratification by centre, age group, waist circumference, 2-h OGTT glucose, smoking, and first-degree family history of type 2 diabetes. The primary outcomes at 2 years were type 2 diabetes (2-h OGTT glucose ≥11·1 mmol/L) and mean change from baseline in 2-h OGTT glucose, assessed by intention to treat. For safety assessment, we did a masked monitoring of haematocrit and prostate-specific antigen, and analysed prespecified serious adverse events. This study is registered with the Australian New Zealand Clinical Trials Registry, ACTRN12612000287831.Between Feb 5, 2013, and Feb 27, 2017, of 19 022 men who were pre-screened, 1007 (5%) were randomly assigned to the placebo (n=503) and testosterone (n=504) groups. At 2 years, 2-h glucose of 11·1 mmol/L or higher on OGTT was reported in 87 (21%) of 413 participants with available data in the placebo group and 55 (12%) of 443 participants in the testosterone group (relative risk 0·59, 95% CI 0·43 to 0·80; p=0·0007). The mean change from baseline 2-h glucose was -0·95 mmol/L (SD 2·78) in the placebo group and -1·70 mmol/L (SD 2·47) in the testosterone group (mean difference -0·75 mmol/L, -1·10 to -0·40; p<0·0001). The treatment effect was independent of baseline serum testosterone. A safety trigger for haematocrit greater than 54% occurred in six (1%) of 484 participants in the placebo group and 106 (22%) of 491 participants in the testosterone group, and a trigger for an increase of 0·75 μg/mL or more in prostate-specific antigen occurred in 87 (19%) of 468 participants in the placebo group and 109 (23%) of 480 participants in the testosterone group. Prespecified serious adverse events occurred in 37 (7·4%, 95% CI 5·4 to 10·0) of 503 patients in the placebo group and 55 (10·9%, 8·5 to 13·9) of 504 patients in the testosterone group. There were two deaths in each group.Testosterone treatment for 2 years reduced the proportion of participants with type 2 diabetes beyond the effects of a lifestyle programme. Increases in haematocrit might be treatment limiting. Longer-term durability, safety, and cardiovascular effects of the intervention remain to be further investigated.Australian National Health and Medical Research Council, Bayer, Eli Lilly, University of Adelaide, and WW (formerly Weight Watchers).