Despite their proven antidiabetic efficacy, widespread use of peroxisome proliferator-activated receptor (PPAR)␥ agonists has been limited by adverse cardiovascular effects. To overcome this shortcoming, selective PPAR␥ modulators (SPPAR␥Ms) have been identified that have antidiabetic efficacy comparable with full agonists with improved tolerability in preclinical species. The results of structural studies support the proposition that SPPAR␥Ms interact with PPAR␥ differently from full agonists, thereby providing a physical basis for their novel activities. Herein, we describe a novel PPAR␥ ligand, SPPAR␥M2. This compound was a partial agonist in a cell-based transcriptional activity assay, with diminished adipogenic activity and an attenuated gene signature in cultured human adipocytes. X-ray cocrystallography studies demonstrated that, unlike rosiglitazone, SPPAR␥M2 did not interact with the Tyr473 residue located within helix 12 of the ligand binding domain (LBD). Instead, SPPAR␥M2 was found to bind to and activate human PPAR␥ in which the Tyr473 residue had been mutated to alanine (hPPAR␥Y473A), with potencies similar to those observed with the wild-type receptor (hPPAR␥WT). In additional studies, we found that the intrinsic binding and functional potencies of structurally distinct SPPAR␥Ms were not diminished by the Y473A mutation, whereas those of various thiazolidinedione (TZD) and non-TZD PPAR␥ full agonists were reduced in a correlative manner. These results directly demonstrate the important role of Tyr473 in mediating the interaction of full agonists but not SPPAR␥Ms with the PPAR␥ LBD, thereby providing a precise molecular determinant for their differing pharmacologies.The peroxisome proliferator-activated receptors (PPARs) ␥, ␦, and ␣ compose a nuclear receptor subfamily that modulates the transcription of a large compendium of genes encoding proteins that regulate lipid metabolism, cell differentiation, and signal transduction in a ligand-dependent manner (Berger and Moller, 2002). PPAR␥ has been shown to be a master regulator of adipogenesis and nutrient metabolism in adipocytes where it is highly expressed. Thiazolidinedione (TZD) PPAR␥ full agonists have demonstrated clinical efficacy for the treatment of type 2 diabetes mellitus (T2DM) patients . However, the use of these insulin-sensitizing agents has been restricted because of their association with several adverse effects, including