Abstract: Peroxisome proliferator-activated receptor gamma (PPAR gamma) is a nuclear receptor that mediates the antidiabetic effects of thiazolidinediones. PPAR gamma is present in adipose tissue and becomes elevated in fatty livers, but the roles of specific tissues in thiazolidinedione actions are unclear. We studied the function of liver PPAR gamma in both lipoatrophic A-ZIP/F-1 (AZIP) and wild type mice. In AZIP mice, ablation of liver PPAR gamma reduced the hepatic steatosis but worsened the hyperlipidemia, triglyceride clearance, and muscle insulin resistance. Inactivation of AZIP liver PPAR gamma also abolished the hypoglycemic and hypolipidemic effects of rosiglitazone, demonstrating that, in the absence of adipose tissue, the liver is a primary and major site of thiazolidinedione action. In contrast, rosiglitazone remained effective in non-lipoatrophic mice lacking liver PPAR gamma, suggesting that adipose tissue is the major site of thiazolidinedione action in typical mice with adipose tissue. Interestingly, mice without liver PPAR gamma, but with adipose tissue, developed relative fat intolerance, increased adiposity, hyperlipidemia, and insulin resistance. Thus, liver PPAR gamma regulates triglyceride homeostasis, contributing to hepatic steatosis, but protecting other tissues from triglyceride accumulation and insulin resistance.