Halofenate has been shown previously to lower triglycerides in dyslipidemic subjects. In addition, significant decreases in fasting plasma glucose were observed but only in type 2 diabetic patients. We hypothesized that halofenate might be an insulin sensitizer, and we present data to suggest that halofenate is a selective peroxisome proliferator-activated receptor (PPAR)-gamma modulator (SPPARgammaM). We demonstrate that the circulating form of halofenate, halofenic acid (HA), binds to and selectively modulates PPAR-gamma. Reporter assays show that HA is a partial PPAR-gamma agonist, which can antagonize the activity of the full agonist rosiglitazone. The data suggest that the partial agonism of HA may be explained in part by effective displacement of corepressors (N-CoR and SMRT) coupled with inefficient recruitment of coactivators (p300, CBP, and TRAP 220). In human preadipocytes, HA displays weak adipogenic activity and antagonizes rosiglitazone-mediated adipogenic differentiation. Moreover, in 3T3-L1 adipocytes, HA selectively modulates the expression of multiple PPAR-gamma-responsive genes. Studies in the diabetic ob/ob mouse demonstrate halofenate's acute antidiabetic properties. Longer-term studies in the obese Zucker (fa/fa) rat demonstrate halofenate's comparable insulin sensitization to rosiglitazone in the absence of body weight increases. Our data establish halofenate as a novel SPPARgammaM with promising therapeutic utility with the potential for less weight gain.