An epidemic of metabolic diseases including type 2 diabetes and obesity is undermining the health of people living in industrialized societies. There is an urgent need to develop innovative therapeutics. The peroxisome proliferator-activated receptor gamma (PPARgamma) is one of the ligand-activated transcription factors in the nuclear hormone receptor superfamily and a pivotal regulator of glucose and lipid homeostasis. The discovery of PPARgamma as a target of multimodal insulin sensitizers, represented by thiazolidinediones (TZDs), has attracted remarkable scientific interest and had a great impact on the pharmaceutical industry. With the clinical success of the PPARgamma agonists, pioglitazone (Actos) and rosiglitazone (Avandia), development of novel and potent insulin-sensitizing agents with diverse clinical profiles has been accelerated. Currently, a number of PPARgamma agonists from different chemical classes and with varying pharmacological profiles are being developed. Despite quite a few obstacles to the development of PPAR-related drugs, PPARgamma-targeted agents still hold promise. There are new concepts and encouraging evidence emerging that suggest this class can yield improved anti-diabetic agents. This review covers the discovery of TZDs, provides an overview of PPARgamma including the significance of PPARgamma as a drug target, describes the current status of a wide variety of novel PPARgamma ligands including PPAR dual and pan agonists and selective PPARgamma modulators (SPPARgammaMs), and highlights new approaches for identifying agents targeting PPARgamma in the treatment of type 2 diabetes.