Peroxisome proliferator-activated receptor-gamma (PPARgamma) activation enhances insulin sensitivity in type 2 diabetes mellitus. However, downstream mediators of PPARgamma activation in adipocytes and myotubes, the most important cell types involved in glucose homeostasis, remained unclear. Here we show by using two synthetic PPARgamma agonists (rosiglitazone and KR-62776, a novel PPARgamma agonist) that phosphatase and tensin homolog deleted on chromosome 10 (PTEN) is a key downstream mediator of PPARgamma signaling. The PPARgamma agonists down-regulated PTEN expression, resulting in glucose uptake increase in differentiated 3T3-L1 adipocytes and C2C12 skeletal muscle cells. In both cells, PTEN knockdown increased glucose uptake, whereas overexpression abolished the agonist-induced effects. The effects of PPARgamma agonists on PTEN expression and glucose uptake disappeared by pretreatment with a PPARgamma antagonist or by knockdown of PPARgamma expression. In vivo treatment of the agonists to C57BL/6J-ob/ob mice resulted in the reduction of PTEN level in both adipose and skeletal muscle tissues and decreased plasma glucose levels. Thus, these results suggest that PTEN suppression is a key mechanism of the PPARgamma-mediated glucose uptake stimulation in insulin-sensitive cells such as adipocytes and skeletal muscle cells, thereby restoring glucose homeostasis in type 2 diabetes.