LSN862 is a novel peroxisome proliferator-activated receptor (PPAR)alpha/gamma dual agonist with a unique in vitro profile that shows improvements on glucose and lipid levels in rodent models of type 2 diabetes and dyslipidemia. Data from in vitro binding, cotransfection, and cofactor recruitment assays characterize LSN862 as a high-affinity PPARgamma partial agonist with relatively less but significant PPARalpha agonist activity. Using these same assays, rosiglitazone was characterized as a high-affinity PPARgamma full agonist with no PPARalpha activity. When administered to Zucker diabetic fatty rats, LSN862 displayed significant glucose and triglyceride lowering and a significantly greater increase in adiponectin levels compared with rosiglitazone. Expression of genes involved in metabolic pathways in the liver and in two fat depots from compound-treated Zucker diabetic fatty rats was evaluated. Only LSN862 significantly elevated mRNA levels of pyruvate dehydrogenase kinase isozyme 4 and bifunctional enzyme in the liver and lipoprotein lipase in both fat depots. In contrast, both LSN862 and rosiglitazone decreased phosphoenol pyruvate carboxykinase in the liver and increased malic enzyme mRNA levels in the fat. In addition, LSN862 was examined in a second rodent model of type 2 diabetes, db/db mice. In this study, LSN862 demonstrated statistically better antidiabetic efficacy compared with rosiglitazone with an equivalent side effect profile. LSN862, rosiglitazone, and fenofibrate were each evaluated in the humanized apoA1 transgenic mouse. At the highest dose administered, LSN862 and fenofibrate reduced very low-density lipoprotein cholesterol, whereas, rosiglitazone increased very low-density lipoprotein cholesterol. LSN862, fenofibrate, and rosiglitazone produced maximal increases in high-density lipoprotein cholesterol of 65, 54, and 30%, respectively. These findings show that PPARgamma full agonist activity is not necessary to achieve potent and efficacious insulin-sensitizing benefits and demonstrate the therapeutic advantages of a PPARalpha/gamma dual agonist.