The biological role of peroxisome proliferator-activated receptor γ (PPARγ) was investigated by gene targeting and case±control study of the Pro12Ala PPARγ2 polymorphism. Homozygous PPARγ-deficient embryos died at 10.5–11.5 days post conception (dpc) due to placental dysfunction. Heterozygous PPARγ-deficient mice were protected from the development of insulin resistance due to adipocyte hypertrophy under a high-fat diet, whose phenotypes were abrogated by PPARγ agonist treatment. Heterozygous PPARγ-deficient mice showed over-expression and hypersecretion of leptin despite the smaller size of adipocytes and decreased fat mass, which may explain these phenotypes at least in part. This study reveals a hitherto unpredicted role for PPARγ in high-fat diet-induced obesity due to adipocyte hypertrophy and insulin resistance, which requires both alleles of PPARγ. A Pro12Ala polymorphism has been detected in the human PPARγ2 gene. Since this amino acid substitution may cause a reduction in the transcriptional activity of PPARγ, this polymorphism may be associated with decreased insulin resistance and decreased risk of type 2 diabetes. To investigate this hypothesis, we performed a case±control study of the Pro12Ala PPARγ2 polymorphism. In an obese group, subjects with Ala12 were more insulin sensitive than those without. The frequency of Ala12 was significantly lower in the diabetic group, suggesting that this polymorphism protects against type 2 diabetes. These results revealed that in both mice and humans, PPARg is a thrifty gene mediating type 2 diabetes.