Peroxisome proliferator-activated receptor (PPAR) gamma is a ligand-activated transcription factor and a member of the nuclear hormone receptor superfamily that is thought to be the master regulator of fat storage; however, the relationship between PPARgamma and insulin sensitivity is highly controversial. We show here that supraphysiological activation of PPARgamma by PPARgamma agonist thiazolidinediones (TZD) markedly increases triglyceride (TG) content of white adipose tissue (WAT), thereby decreasing TG content of liver and muscle, leading to amelioration of insulin resistance at the expense of obesity. Moderate reduction of PPARgamma activity by heterozygous PPARgamma deficiency decreases TG content of WAT, skeletal muscle, and liver due to increased leptin expression and increase in fatty acid combustion and decrease in lipogenesis, thereby ameliorating high fat diet-induced obesity and insulin resistance. Moreover, although heterozygous PPARgamma deficiency and TZD have opposite effects on total WAT mass, heterozygous PPARgamma deficiency decreases lipogenesis in WAT, whereas TZD stimulate adipocyte differentiation and apoptosis, thereby both preventing adipocyte hypertrophy, which is associated with alleviation of insulin resistance presumably due to decreases in free fatty acids, and tumor necrosis factor alpha, and up-regulation of adiponectin, at least in part. We conclude that, although by different mechanisms, both heterozygous PPARgamma deficiency and PPARgamma agonist improve insulin resistance, which is associated with decreased TG content of muscle/liver and prevention of adipocyte hypertrophy.