A novel series of 1,2,3,4-tetrahydroisoquinoline-3-carboxylic acid derivatives were synthesized and biologically evaluated. (S)-2-Benzyl-7-[2-(5-methyl-2-phenyloxazol-4-yl)ethoxy]-1,2,3,4-tetrahydroisoquinoline-3-carboxylic acid (10, KY-021) was identified as a novel peroxisome proliferators-activated receptor (PPAR) gamma agonist, which showed potent activity in human PPAR gamma (EC50=11.8 nM). KY-021 reduced plasma glucose and triglyceride levels at 3 mg/kg/d for 7 d in male KK-Ay mice. KY-021 also decreased plasma triglyceride levels at 0.3-3 mg/kg/d for 6 d, and improved oral glucose tolerance at 1 and 3 mg/kg/d for 7 d in male Zucker fatty rats. Maximal plasma concentration of KY-021 after oral administration at 10 mg/kg was 6.6 microg/ml and 2.1 microg/ml in male ICR mice and male SD rats, respectively. Repeated oral administration of KY-021 at 30 mg/kg/d for 10 weeks had little toxicity in male SD rats. These results demonstrated that KY-021 has great potential as an efficacious and safe drug for diabetes.