Peroxisome proliferator-activated receptor (PPAR) isoforms (alpha and gamma) are known to be expressed in pancreatic islets as well as in insulin-producing cell lines. Ligands of PPAR have been shown to enhance glucose-induced insulin secretion in rat pancreatic islets. However, their effect on insulin secretion is still unclear. To understand the molecular mechanism by which PPARgamma exerts its effect on glucose-induced insulin secretion, we examined the endogenous activity of PPAR isoforms, and studied the PPARgamma function and its target gene expression in INS-1 cells. We found that: (1) endogenous PPARg was activated in a ligand-dependent manner in INS-1 cells; (2) overexpression of PPARgamma in the absence of PPARgamma ligands enhanced glucose-induced insulin secretion, which indicates that the increased glucose-induced insulin secretion is a PPARgamma-mediated event; (3) the addition of both PPARgamma and retinoid X receptor (RXR) ligands showed a synergistic effect on the augmentation of reporter activity, suggesting that the hetero-dimerization of PPARgamma and RXR is required for the regulation of the target genes; (4) PPARs upregulated both the glucose transporter 2 (GLUT2) and Cb1-associated protein (CAP) genes in INS-1 cells. Our findings suggest an important mechanistic pathway in which PPARgamma enhances glucose-induced insulin secretion by activating the expression of GLUT2 and CAP genes in a ligand-dependent manner.