Thiazolidinediones (TZDs) are a new class of antidiabetic agents and include three compounds that have come to clinical use—troglitazone (Rezulin®), rosiglitazone (Avandia®), and pioglitazone (Actos®)—as well as several others that have been limited to pre-clinical study. TZDs were initially discovered by screening compounds for a hypoglycemic action in the ob/ob mouse (1), and subsequently they were shown to improve insulin action in a variety of obese and diabetic animal models with insulin resistance (2). In these model systems, TZDs reduce plasma glucose and insulin levels and improve some of the abnormalities of lipid metabolism. Consistent with animal studies, clinical studies have shown that treatment of type 2 diabetic patients with TZDs can lower serum glucose and insulin levels, increase peripheral glucose uptake, and decrease triglyceride levels (3). In euglycemic clamp studies, this is associated with an increase in insulin sensitivity in peripheral tissues (mainly represented by muscle in clamp studies), with relatively little effect on hepatic glucose output (4). Insights into the molecular mechanism of action of TZDs came from studies that demonstrated that these agents increase transcription of certain genes in adipose tissue (5, 6). The recognition that the promoter region of one of the genes, the fat-specific gene aP2, binds a transcription factor identified as PPARγ (7) led Spiegelman, Kletzien, and Kliewer (6–9) to propose that TZDs exert their effects by activating this nuclear receptor. Due to alternative splicing and alternative promoter usage, there are two isoforms of PPARγ (1 and 2), and both are predominantly expressed in fat cells (10). Subsequent studies have shown an excellent correlation between the hypoglycemic action of the TZDs and their affinity for PPARγ. Regulation of gene expression via PPARγ is tissue-specific (10), and although its role in adipocyte differentiation is well documented (10), the normal functions of PPARγ remain unclear. Complete elimination of a functional PPARγ gene results in embryonic lethality, whereas PPARγ heterozygote knockout mice with a 50% reduction in PPARγ expression exhibit increased basal insulin sensitivity and resistance to high-fat diet–induced insulin resistance (11). Despite the evidence that TZDs act by binding to PPARγ and can improve different insulin-resistant states in both human and animal studies, the exact mechanism and site of action of the TZDs are still unclear. Type 2 diabetes is a complex metabolic syndrome with alterations in glucose, lipid, and protein metabolism (12). Hyperglycemia in type 2 diabetes is due to a decrease in insulin action to stimulate glucose uptake in peripheral tissues, such as muscle and fat, as well as unsuppressed hepatic glucose output and relative hypoinsulinemia. Traditional thinking suggests that the defect in muscle glucose uptake accounts for most of the postprandial hyperglycemia, the increase in fasting glucose is due to the increased hepatic glucose output, and the lipid abnormalities are due to a combination of defects in fat and liver (12). However, recent studies in mice in which insulin resistance has been created in individual tissues by conditional gene knockout suggest that these classical views may have been oversimplified (13–15). Thus, the muscle-specific insulin receptor knockout mouse exhibits hypertriglyceridemia and increased FFAs (14), the liver-specific knockout exhibits only mild hyperglycemia and lower triglycerides (15), the fat-specific knockout has normal glucose tolerance (MD Michael and CR Kahn, unpublished observations), and the β cell–specific knockout of the insulin receptor produces a defect in glucose …