Inverse agonists of peroxisome proliferator activated receptor γ (PPARγ) have emerged as safer alternatives to full agonists for their reduced side effects while still maintaining impressive insulin-sensitizing properties. To shed light on their molecular mechanism, we characterized the interaction of the PPARγ ligand binding domain with SR10221. X-ray crystallography revealed a novel binding mode of SR10221 in the presence of a transcriptionally repressing corepressor peptide, resulting in much greater destabilization of the activation helix, H12, than without corepressor peptide. Electron paramagnetic resonance provided in-solution complementary protein dynamic data, which revealed that for SR10221-bound PPARγ, H12 adopts a plethora of conformations in the presence of corepressor peptide. Together, this provides the first direct evidence for corepressor-driven ligand conformation for PPARγ and will allow the development of safer and more effective insulin sensitizers suitable for clinical use.