The nuclear receptor peroxisome proliferator-activated receptor gamma (PPARgamma) promotes adipocyte differentiation, exerts atherogenic and anti-inflammatory effects in monocyte/macrophages, and is believed to mediate the insulin-sensitizing action of antidiabetic thiazolidinedione ligands. As no complete PPARgamma antagonists have been described hitherto, we have constructed a dominant-negative mutant receptor to inhibit wild-type PPARgamma action. Highly conserved hydrophobic and charged residues (Leu(468) and Glu(471)) in helix 12 of the ligand-binding domain were mutated to alanine. This compound PPARgamma mutant retains ligand and DNA binding, but exhibits markedly reduced transactivation due to impaired coactivator (cAMP-response element-binding protein-binding protein and steroid receptor coactivator-1) recruitment. Unexpectedly, the mutant receptor silences basal gene transcription, recruits corepressors (the silencing mediator of retinoid and thyroid receptors and the nuclear corepressor) more avidly than wild-type PPARgamma, and exhibits delayed ligand-dependent corepressor release. It is a powerful dominant-negative inhibitor of cotransfected wild-type receptor action. Furthermore, when expressed in primary human preadipocytes using a recombinant adenovirus, this PPARgamma mutant blocks thiazolidinedione-induced differentiation, providing direct evidence that PPARgamma mediates adipogenesis. Our observations suggest that, as in other mutant nuclear receptor contexts (acute promyelocytic leukemia, resistance to thyroid hormone), dominant-negative inhibition by PPARgamma is linked to aberrant corepressor interaction. Adenoviral expression of this mutant receptor is a valuable means to antagonize PPARgamma signaling.