Syndrome X, typified by obesity, insulin resistance (IR), dyslipidemia, and other metabolic abnormalities, is responsive to antidiabetic thiazolidinediones (TZDs). Peroxisome proliferator-activated receptor (PPAR) gamma, a target of TZDs, is expressed abundantly in adipocytes, suggesting an important role for this tissue in the etiology and treatment of IR. Targeted deletion of PPARgamma in adipose tissue resulted in marked adipocyte hypocellularity and hypertrophy, elevated levels of plasma free fatty acids and triglyceride, and decreased levels of plasma leptin and ACRP30. In addition, increased hepatic glucogenesis and IR were observed. Despite these defects, blood glucose, glucose and insulin tolerance, and insulin-stimulated muscle glucose uptake were all comparable to those of control mice. However, targeted mice were significantly more susceptible to high-fat diet-induced steatosis, hyperinsulinemia, and IR. Surprisingly, TZD treatment effectively reversed liver IR, whereas it failed to lower plasma free fatty acids. These results suggest that syndrome X may be comprised of separable PPARgamma-dependent components whose origins and therapeutic sites may reside in distinct tissues.