The recent development of a novel class of insulin-sensitizing drugs, the thiazolidinediones (TZDs), represents a significant advance in antidiabetic therapy. One key mechanism by which these drugs exert their effects is by activation of the peroxisome proliferator activated receptor γ (PPAR-γ), a member of the nuclear receptor family. Evidence supporting this mechanism of action of the TZDs will be reviewed in this article. Recent data suggests that PPAR-γ agonists might also have therapeutic potential in the treatment of inflammatory diseases and certain cancers.