The peroxisome proliferator‐activated receptor γ (PPARγ) regulates adipocyte differentiation and glucose homeostasis and is the molecular target of thiazolidinediones (TZDs) that act as insulin‐sensitizers in patients with type 2 diabetes. PPARγ is also expressed in macrophages and negatively regulates the programme of macrophage activation by repressing a subset of AP1 and NF‐κB‐dependent genes. Recent genetic, molecular and biochemical studies support the idea that PPARγ inhibits inflammatory gene expression in activated macrophages by a NCoR/sumoylation‐dependent pathway. Sumoylation of PPARγ targets it to NCoR corepressor complexes that are bound to inflammatory response gene promoters and prevents their signal‐dependent clearance that is normally a prerequisite for transcriptional activation. As a consequence, genes remain in a repressed state. Because the ligand‐induced allosteric changes that promote entry of PPARγ into this transrepression pathway are distinct from those that mediate interactions with conventional coactivators, these findings may facilitate the development of novel PPARγ ligands that retain antidiabetic activities but have reduced side effects.