Thiazolidinediones (TZD, glitazones) are a new class of oral antidiabetic drugs which exert their insulin sensitizing action by stimulation of the nuclear transcription factor peroxisome proliferator-activated receptor gamma (PPAR-gamma). At present pioglitazone and rosiglitazone are available for clinical use. Different activation levels of PPAR-gamma and of co-factors determine the binding of PPAR-gamma to distinct target genes, which in turn regulates their transcriptional activity. TZD lower blood glucose levels, partly by influencing glucose transporters and the insulin-signaling pathway. In this review the molecular and cellular mechanisms as well as the metabolic effects of PPAR activation by TZD are discussed. Knowledge regarding the influence of genetic variations of PPAR-gamma on the effects of TZD is so far limited to in vitro studies. The results of these studies are reviewed.