This is a randomized (study drug assigned by chance), double blind (neither the patient or the study doctor will know the name of the assigned treatment), parallel-group, 3-arm (patients will be assigned to 1 of 3 treatment groups) multicenter study to determine the efficacy, safety, and tolerability of 2 different doses of canagliflozin (100 mg and 300 mg) compared to placebo (a pill that looks like all the other treatments but has no real medicine) in patients with type 2 diabetes mellitus (T2DM) who have renal impairment (reduced kidney function) and who are not achieving an adequate response from current therapy to control their diabetes. Canagliflozin (also referred to as JNJ-28431754) is a drug that is being tested to see if it may be useful in treating patients diagnosed with T2DM. Approximately 240 patients will participate in the study for approximately 63 to 72 weeks, depending on the length of the pretreatment phase. The study will consist of a pretreatment phase, a 52 week double blind treatment phase, and a posttreatment phase. During the pretreatment phase, screening evaluations will be performed to see if patients meet the entry criteria for the study. In addition, routine clinical procedures will be performed (physical examination, vital signs measurements, and an electrocardiogram \[ECG\]), a blood and urine sample will be collected for routine clinical laboratory tests, and all antihyperglycemic therapy taken by patients will be reviewed. Patients who meet entrance criteria for the study and who currently take a stable antihyperglycemic agent (AHA) regimen according to the local prescribing information will be eligible for inclusion in the study. Patients who meet entrance criteria for the study but who are not taking a stable AHA regimen according to the local prescribing information will enter an AHA adjustment period that may last for up to 12 weeks. Patients will receive once daily treatment with study drug in addition to their current stable diabetes regimen (eg, diet, exercise, and medication therapy). Patients will continue to take their assigned treatment for 52 weeks (includes a 26-week core double-blind treatment period and a 26-week extension double-blind treatment period). During the study, if a patient's blood sugar remains high despite treatment with study drug in combination with their other antidiabetic agents, the study physician will modify the patient's treatment. If patients take insulin and experience low blood sugar (hypoglycemia), the dose of insulin may be modified. During the study, patients will be monitored for safety by review of adverse events, results from safety laboratory tests (including chemistry, hematology, and urinalysis), ECGs, vital signs measurements, body weight, physical examinations, self-monitored blood glucose, and collection of potential hypoglycemic episodes reported by patients on diary cards. The safety of patients in this study will also be monitored by a company internal Medical Safety Review Committee (MSRC). An Independent Data Monitoring Committee (IDMC) will evaluate cardiovascular (CV) events that are reported across the entire clinical development program for canagliflozin. Patients who complete the Week 52 visit or who discontinue treatment early and are withdrawn from the study will have end-of-study evaluations performed and a follow-up telephone interview conducted by study personnel approximately 30 days (but no more than 42 days) after the last dose of study drug to collect any serious adverse events that occurred since their last study visit. The primary outcome measures in the study are to assess the effect of canagliflozin relative to placebo on hemoglobin A1c (HbA1c, a blood test used to measure the control of diabetes) after 26 weeks of treatment and to assess the safety and tolerability of canagliflozin from time of signed informed consent to study end (includes up to 30 days following the last dose of study drug). All patients will take a single-blind placebo capsule once daily for 2 weeks before randomization to double-blind study drug. After randomization, patients will take one capsule of canagliflozin (either 100 mg or 300 mg) or matching placebo orally (by mouth) with liquid once daily for 52 weeks before the first meal each day except on days when fasting or pharmacokinetic blood samples are collected in which case study drug will be taken after the visit immediately before the patient's next meal.