The ob gene product, leptin, is a major hormonal regulator of appetite and fat cell mass. Recent work has suggested that the antidiabetic agents, the thiazolidinediones (TZ), which are also high affinity ligands of peroxisome proliferator-activated receptor-gamma (PPARgamma), inhibit leptin expression in rodents. To examine the effects of this class of drug on the leptin gene in adipocytes we performed Northern analysis on primary rat adipocytes cultured in the presence or absence of TZ. TZ reduced leptin mRNA levels by 75%. To determine whether this effect was mediated at the transcriptional level, we isolated 6510 base pairs of 5'-flanking sequence of the leptin promoter and studied reporter constructs in primary rat adipocytes and CV-1 cells. Sequence analysis demonstrated the presence of a consensus direct repeat with a 1-base-pair gap site between -3951 and -3939 as well as a consensus CCAAT/enhancer binding protein (C/EBP) site between -55 and -47. Our functional analysis in transfected primary rat adipocytes demonstrates that, despite the presence of a canonical direct repeat with a 1-base-pair gap site, TZ alone decreases reporter gene expression of leptin promoter constructs ranging from -6510 to +9 to -65 to +9. In CV-1 cells, which contain endogenous PPARgamma, TZ treatment alone had little effect on these constructs. However, TZ treatment did inhibit C/EBPalpha-mediated transactivation of the leptin promoter. This down-regulation of leptin reporter constructs mapped to a -65 to +9 promoter fragment which binds C/EBPalpha in gel-mobility shift assays but does not bind PPARgamma2 alone or as a heterodimer with 9-cis-retinoic acid receptor. Conversely, the promoter (-5400 to +24 base pairs) of the aP2 gene, another adipocyte-specific gene, was induced 7.3-fold by TZ. Co-transfection with C/EBPalpha minimally stimulated the aP2 promoter from basal levels but notably blocked activation by TZ. These data indicate that PPARgamma and C/EBPalpha can functionally antagonize each other on at least two separate promoters and that this mechanism may explain the down-regulation of leptin expression by thiazolidinediones.