A PPARγ fluorescence polarization (FP) assay was used to measure the release of fatty acid products from triglyceride emulsions during digestion with pancreatic and yeast lipases in a real-time, homogenous assay. Using the same FP assay we show the anti-obesity drug Orlistat is a PPARγ ligand with an IC50 of 2.84 ± 0.16 μM. Analytical Mass Spectrometry confirms that Orlistat does not bind covalently to PPARγ. The PPARγ FP assay is shown to be a simple method for measuring real-time lipase activity using a number of triglyceride substrates including olive oil and grape seed oil emulsions. Incubation of Orlistat with the human intestinal epithelial cell line Caco-2, at concentrations of 1 - 100 μM, leads to induction of genes regulated by PPARγ. At 100 μM Orlistat, transcription of β-defensin 1 (hDB1) & Adipose Differentiation Related Protein (ADRP) increase by up to 2.6 fold and 6.8 fold, respectively. Although at 1 μM and 100 μM Orlistat did not significantly increase defensin protein synthesis, at 10 μM Orlistat induced a 1.5 fold increase in hDB1 protein secretion in the human colonic adenocarcinoma cell line HT-29. Thus Orlistat is similar to the anti-diabetic drug Rosiglitazone in its ability to induce defensin gene expression. The antimicrobial peptide β-defensin 1 protects against pathogenic micro-organisms in the gut and PPARγ suppresses inflammatory gene expression. These may be beneficial side effects of Orlistat consumption on gut epithelial cells.