Loss-of-function mutations in the ligand-binding domain of human peroxisome proliferator-activated receptor gamma (PPARgamma) are associated with a novel syndrome characterized by partial lipodystrophy and severe insulin resistance. Here we have further characterized the properties of natural dominant-negative PPARgamma mutants (P467L, V290M) and evaluated the efficacy of putative natural ligands and synthetic thiazolidinedione (TZD) or tyrosine-based (TA) receptor agonists in rescuing mutant receptor function. A range of natural ligands failed to activate the PPARgamma mutants and their transcriptional responses to TZDs (e.g. pioglitazone, rosiglitazone) were markedly attenuated, whereas TAs (e.g. farglitazar) corrected defects in ligand binding and coactivator recruitment by the PPARgamma mutants, restoring transcriptional function comparable with wild-type receptor. Transcriptional silencing via recruitment of corepressor contributes to dominant-negative inhibition of wild type by the P467L and V290M mutants and the introduction of an artificial mutation (L318A) disrupting corepressor interaction abrogated their dominant-negative activity. More complete ligand-dependent corepressor release and reversal of dominant-negative inhibition was achieved with TA than TZD agonists. Modeling suggests a structural basis for these observations: both mutations destabilize helix 12 to favor receptor-corepressor interaction; conversely, farglitazar makes more extensive contacts than rosiglitazone within the ligand-binding pocket, to stabilize helix 12, facilitating corepressor release and transcriptional activation. Farglitazar was a more potent inducer of PPARgamma target gene (aP2) expression in peripheral blood mononuclear cells with the P467L mutation. Having shown that rosiglitazone is of variable and limited efficacy in these subjects, we suggest that TAs may represent a more rational therapeutic approach.