Peroxisome proliferator-activated receptor-γ (PPARγ), an orphan nuclear receptor, mediates adipocyte differentiation and is the cellular target for the thiazolidinedione group of insulin-sensitizing antidiabetic agents. We screened this receptor gene in a cohort of subjects with severe insulin resistance and have identified heterozygous missense mutations in several individuals from three families. Functional studies indicate that the receptor mutants are transcriptionally impaired and inhibit wild type PPARγ action in a dominant-negative manner. The clinical phenotype of patients includes partial lipodystrophy, early-onset hypertension, dyslipidaemia and hepatic steatosis. Factors which contribute to the severe insulin resistance in affected individuals include diminished body fat mass, impaired lipid flux in adipose tissue and reduced circulating levels of adiponectin. In a large kindred of five individuals with severe insulin resistance, we have identified frameshift/premature stop mutations in PPARγ and the muscle-specific regulatory subunit of protein phosphatase 1 (PPP1R3A). The frameshift PPARγ mutant exhibits complete loss of function with no dominant-negative activity; the PPP1R3A truncation mutant is mislocalized intracellularly. Individuals harbouring either gene defect alone have normal circulating insulin levels, but a combination of both genetic abnormalities co-segregates with severe insulin resistance.