Here we showed that a naturally occurring ether analog of lysophosphatidic acid, 1-O-octadecenyl-2-hydroxy-sn-glycero-3-phosphate (AGP), is a high affinity partial agonist of the peroxisome proliferator-activated receptor gamma (PPARgamma). Binding studies using the PPARgamma ligand binding domain showed that [32P]AGP and [3H]rosiglitazone (Rosi) both specifically bind to PPARgamma and compete with each other. [32P]AGP bound PPARgamma with an affinity (Kdapp 60 nm) similar to that of Rosi. However, AGP displaced approximately 40% of bound [3H]Rosi even when applied at a 2000-fold excess. Activation of PPARgamma reporter gene expression by AGP and Rosi showed similar potency, yet AGP-mediated activation was approximately 40% that of Rosi. A complex between AGP and PPARgamma was generated using molecular modeling based on a PPARgamma crystal structure. AGP-interacting residues were compared with Rosi-interacting residues identified within the Rosi-PPARgamma co-crystal complex. These comparisons showed that the two ligands occupy partially overlapping positions but make different hydrogen bonding and ion pairing interactions. Site-specific mutants of PPARgamma were prepared to examine individual ligand binding. H323A and H449A mutants showed reduced binding of Rosi but maintained binding of AGP. In contrast, the R288A showed reduced AGP binding but maintained Rosi binding. Finally, alanine replacement of Tyr-473 abolished binding and activation by Rosi and AGP. These observations indicate that the endogenous lipid mediator AGP is a high affinity ligand of PPARgamma but that it binds via interactions distinct from those involved in Rosi binding. These distinct interactions are likely responsible for the partial PPARgamma agonism of AGP.