The nuclear peroxisome proliferator-activated receptor gamma (PPAR gamma) i
s a transcription factor that is activated by polyunsaturated fatty acids a
nd their metabolites and is essential for fat cell formation. Although obes
ity is a strong risk factor for type 2 diabetes mellitus and other metaboli
c diseases, potent PPAR gamma activators such as the glitazone drugs lower
glucose and lipid levels in patients with type 2 diabetes and also have ant
iatherosclerotic and antihypertensive effects. We review recent studies pro
viding insight into the paradoxical relationship between PPAR gamma and met
abolic disease. We also review recent advances in understanding the structu
ral basis for PPAR gamma activation by ligands. The unusual ligand-binding
properties of PPAR gamma suggest that it will be possible to discover new c
hemical classes of receptor "modulators" with distinct pharmacological acti
vities for the treatment of type 2 diabetes and other metabolic diseases.