Peroxisome proliferator-activated receptor ␥ (PPAR␥) is a member of the nuclear hormone receptor superfamily, and is an important regulator of adipogenesis and adipocyte gene expression. PPAR␥ exists as two isoforms, PPAR␥1 and PPAR␥2, that differ only in their N termini. Both isoforms are activated by ligands that include the antidiabetic thiazoladinedione drugs and 15-deoxy-⌬ 12, 14 -prostaglandin J2, and potential differences in their function have yet to be described. We report that, in addition to a ligand-activated transcriptional activity, when studied under conditions of ligand depletion, intact PPAR␥ has a ligand-independent activation domain. To identify the basis for this ligand-independent activation, we used GAL4-PPAR␥ chimeric expression constructs and UAS-TK-LUC in CV1 cells and isolated rat adipocytes. In both cell systems, isolated PPAR␥1 and PPAR␥2 N termini have activation domains, and the activation function of PPAR␥2 is 5-6-fold greater than that of PPAR␥1. Insulin enhances the transcriptional effect mediated by both PPAR␥1 and PPAR␥2 N-terminal domains. These data demonstrate that 1) PPAR␥ has an N-terminal (ligandindependent) activation domain; 2) PPAR␥1 and PPAR␥2 N termini have distinct activation capacities; and 3) insulin can potentiate the activity of the N-terminal domain of PPAR␥.The peroxisome proliferator-activated receptor ␥ (PPAR␥) 1 is a member of the nuclear receptor superfamily that plays a pivotal role in the molecular determination of adipogenesis and the regulation of adipocyte gene expression (1-5). Under appropriate conditions, expression of PPAR␥ through retroviral infection of fibroblastic cell lines is sufficient to cause differentiation along an adipocyte lineage, as assessed by expression of adipocyte-specific genes, accumulation of lipid, and acquisition of adipocyte morphology (6). Recently, it has been shown that 15-deoxy-⌬ 12, 14 -prostaglandin J2 (PG J2) is a high affinity ligand for PPAR␥ (7,8) and that PPAR␥ is also the receptor for the thiazoladinedione class of insulin-sensitizing drugs (7,8). PPAR␥ resembles other members of the nuclear receptor superfamily in that ligand-dependent receptor activation alters the rates of transcription of genes, specifically those that have peroxisome proliferator response elements (PPREs) within their promoters (e.g. aP2, phosphoenolpyruvate carboxykinase, and uncoupling protein) (9 -11).PPAR␥ exists as two isoforms, PPAR␥1 and PPAR␥2, that differ only in their N termini, with PPAR␥2 having an additional 30 amino acids that are encoded by a single exon (9, 12). Expression of mRNA encoding the two isoforms is driven by alternative promoters within a single PPAR␥ gene (12), and their expression is differentially regulated in a tissue-specific manner. PPAR␥2 is most abundantly expressed in adipocytes and is relatively specific for this tissue (9, 13). In contrast, while PPAR␥1 is also expressed at a high level in adipocytes, it is also found at significant but lower levels in a number of other tissues, including muscle (13-15...