PPARgamma is essential for adipogenesis and metabolic homeostasis. We describe mutations in the DNA and ligand binding domains of human PPARgamma in lipodystrophic, severe insulin resistance. These receptor mutants lack DNA binding and transcriptional activity but can translocate to the nucleus, interact with PPARgamma coactivators and inhibit coexpressed wild-type receptor. Expression of PPARgamma target genes is markedly attenuated in mutation-containing versus receptor haploinsufficent primary cells, indicating that such dominant-negative inhibition operates in vivo. Our observations suggest that these mutants restrict wild-type PPARgamma action via a non-DNA binding, transcriptional interference mechanism, which may involve sequestration of functionally limiting coactivators.