The peptide hormone glucagon stimulates hepatic glucose output, and its levels in the blood are elevated in type 2 diabetes mellitus. The nuclear receptor peroxisome proliferator-activated receptor-␥ (PPAR␥) has essential roles in glucose homeostasis, and thiazolidinedione PPAR␥ agonists are clinically important antidiabetic drugs. As part of their antidiabetic effect, thiazolidinediones such as rosiglitazone have been shown to inhibit glucagon gene transcription through binding to PPAR␥ and inhibition of the transcriptional activity of PAX6 that is required for cell-specific activation of the glucagon gene. However, how thiazolidinediones and PPAR␥ inhibit PAX6 activity at the glucagon promoter remained unknown. After transient transfection of a glucagon promoter-reporter fusion gene into a glucagonproducing pancreatic islet ␣-cell line, ligand-bound PPAR␥ was found in the present study to inhibit glucagon gene transcription also after deletion of its DNA-binding domain. Like PPAR␥ ligands, also retinoid X receptor (RXR) agonists inhibited glucagon gene transcription in a PPAR␥-dependent manner. In glutathione transferase pull-down assays, the ligand-bound PPAR␥-RXR heterodimer bound to the transactivation domain of PAX6. This interaction depended on the presence of the ligand and RXR, but it was independent of the PPAR␥ DNA-binding domain. Chromatin immunoprecipitation experiments showed that PPAR␥ is recruited to the PAX6-binding proximal glucagon promoter. Taken together, the results of the present study support a model in which a ligand-bound PPAR␥-RXR heterodimer physically interacts with promoter-bound PAX6 to inhibit glucagon gene transcription. These data define PAX6 as a novel physical target of PPAR␥-RXR.Peroxisome proliferator-activated receptor-␥ (PPAR␥) belongs to the superfamily of ligand-regulated nuclear hormone receptors (Desvergne and Wahli, 1999). It can be structurally subdivided into an amino-terminal, ligand-independent transactivation domain (AF-1) followed by a DNA-binding domain and a carboxyl-terminal, ligand-binding domain that contains a second, ligand-dependent transactivation surface (AF-2) (Desvergne and Wahli, 1999). PPAR␥ binds as a heterodimer with the 9-cis-retinoic acid (9cis-RA) receptor (RXR) to response elements (PPREs) in target genes to activate transcription. Upon ligand binding and depending on the tissue-specific cofactor environment, the PPAR␥-RXR heterodimer recruits coactivators to stimulate promoter activity. This recruitment is dependent on ligand-induced allosteric alterations in the AF-2 helical domain (Nolte et al., 1998). In addition to transcriptional stimulation, PPAR␥ has been shown to be also capable of repression of gene transcription (Ricote et al., 1998;Schinner et al., 2002) PPAR␥ is thought to be involved in a broad-range of cellular functions, including adipocyte differentiation, inflammation, blood pressure regulation, and apoptosis, and in chronic This work was supported by Deutsche Forschungsgemeinschaft grant SFB402/A3, GRK335.Article, p...