The thiazolidinedione class of insulin-sensitizing, antidiabetic drugs interacts with peroxisome proliferator–activated receptor γ (PPAR-γ). To gain insight into the role of this nuclear receptor in insulin resistance and diabetes, we conducted metabolic studies in the PPAR-γ gene knockout mouse model. Because homozygous PPAR-γ–null mice die in development, we studied glucose metabolism in mice heterozygous for the mutation (PPAR-γ^+/– mice). We identified no statistically significant differences in body weight, basal glucose, insulin, or FFA levels between the wild-type (WT) and PPAR-γ^+/– groups. Nor was there a difference in glucose excursion between the groups of mice during oral glucose tolerance test, but insulin concentrations of the WT group were greater than those of the PPAR-γ^+/– group, and insulin-induced increase in glucose disposal rate was significantly increased in PPAR-γ^+/– mice. Likewise, the insulin-induced suppression of hepatic glucose production was significantly greater in the PPAR-γ^+/– mice than in the WT mice. Taken together, these results indicate that — counterintuitively — although pharmacological activation of PPAR-γ improves insulin sensitivity, a similar effect is obtained by genetically reducing the expression levels of the receptor.