This study investigated whether rosiglitazone may affect breast cancer risk in female patients with type 2 diabetes mellitus in Taiwan. The reimbursement database of all female patients with type 2 diabetes mellitus under oral antidiabetic agents or insulin from 1996 to 2009 was retrieved from the National Health Insurance. An entry date was set on 1 January 2006 and a total of 431447 patients were followed up for breast cancer incidence till the end of 2009. Incidences for ever users, never users and subgroups of rosiglitazone dose-response parameters (tertile cutoffs of cumulative duration and cumulative dose) were calculated and hazard ratios estimated by Cox regression. There were 53029 ever users and 378418 never users, respective numbers of incident breast cancer 410 (0.77%) and 3292 (0.87%), and respective incidence 217.53 and 249.12 per 100000 person-years. The overall hazard ratio was 0.889 (95% confidence interval: 0.797-0.992) in the fully adjusted model. Significantly lower risk was observed for the third tertiles of cumulative duration (> 14 months) and cumulative dose (> 1792 mg) while compared to never users, with respective adjusted hazard ratio of 0.815 (95% confidence interval: 0.682-0.973) and 0.815 (95% confidence interval: 0.682-0.974). Additionally, a significant interaction between metformin and rosiglitazone was observed. The lowest risk was seen in patients who used both drugs (hazard ratio 0.812, 95% confidence interval: 0.705-0.934). In conclusion, rosiglitazone reduces breast cancer risk in female patients with type 2 diabetes mellitus, which shows a significant interaction with metformin.