Peroxisome proliferator-activated receptors (PPARs) are ligand-activated transcription factors that belong to the nuclear hormone receptor superfamily. The activation of PPAR-gamma, an isotype of PPARs, can either increase or decrease the transcription of target genes. The genes controlled by this form of PPAR have been shown to encode proteins or peptides that participate in the pathogenesis of insulin resistance. Insulin resistance is defined as a state of reduced responsiveness to normal circulating concentrations of insulin and it often co-exists with central obesity, hypertension, dyslipidemia, and atherosclerosis. There is substantial evidence that links obesity with insulin resistance and type-2 diabetes. The early phase of obesity-related insulin resistance has 2 components: (a) interruption of lipid homeostasis leading to the increased plasma concentration of fatty acids that is normally suppressed by the activation of PPAR-gamma, and (b) activation of factors such as cytokines depressed by PPAR-gamma that cause insulin resistance. Therefore, it is logical to suggest that activation of PPAR-gamma may partially reverse the state of insulin resistance. Evidently, activation of the nuclear receptor, PPAR-gamma, by thiazolidinediones has been reported to ameliorate insulin resistance. Although hepatotoxity and possibility to induce congestive heart failure (CHF) limit the widely use of thiazolodinediones, they are still powerful weapon to fight against insulin resistance and type-2 diabetes if use properly. This article reviews the physiology of PPAR-gamma and insulin-signaling transduction, the pathogenesis of insulin resistance in obesity-related type-2 diabetes, the pharmacological role of PPAR-gamma in insulin resistance, and additional effects of thiazolidinediones.