Since its identification as the receptor for antidiabetic thiazolidinedione drugs, peroxisome proliferator-activated receptor-gamma (PPARgamma) has been the focus of pharmaceutical drug discovery programs directed toward finding better drugs for the treatment of diabetes, as well as the object of basic research aimed at understanding its role in the regulation of metabolism. We now understand a great deal about the crucial role that PPARgamma plays in adipocyte differentiation and development, and are rapidly gaining knowledge about the role of the receptor in the regulation of metabolism. However, many crucial aspects of the molecular mechanism by which modulation of PPARgamma activity affects insulin resistance and glucose homeostasis are still not clearly understood. Here the authors review the current status of PPARgamma research, with an emphasis on its role in the causes and treatment of type 2 diabetes.