Patients with type 2 diabetes mellitus exhibit hyperglycemia and dyslipidemia as well as a markedly increased incidence of atherosclerotic cardiovascular disease. Here we report the characterization of a novel arylthiazolidinedione capable of lowering both glucose and lipid levels in animal models. This compound, designated TZD18, is a potent agonist with dual human peroxisome proliferator-activated receptor (PPAR)-alpha/gamma activities. In keeping with its PPARgamma activity, TZD18 caused complete normalization of the elevated glucose in db/db mice and Zucker diabetic fatty rats. TZD18 lowered both cholesterol and triglycerides in hamsters and dogs. TZD18 inhibited cholesterol biosynthesis at steps before mevalonate and reduced hepatic levels of 3-hydroxy-3-methylglutaryl coenzyme A reductase activity. Moreover, TZD18 significantly suppressed gene expression of fatty acid synthesis and induced expression of genes for fatty acid degradation and triglyceride clearance. Studies on 17 additional PPARalpha or PPARalpha/gamma agonists showed that lipid lowering in hamsters correlated with the magnitude of hepatic gene expression changes. Importantly, the presence of PPARgamma agonism did not affect the relationship between hepatic gene expression and lipid lowering. Taken together, these data suggest that PPARalpha/gamma agonists, such as TZD18, affect lipid homeostasis, leading to an antiatherogenic plasma lipid profile. Agents with these properties may provide favorable means for treatment of type 2 diabetes and dyslipidemia and the prevention of atherosclerotic cardiovascular disease.