PFKFB3 is the gene that codes for the inducible isoform of 6-phosphofructo-2-kinase (iPFK2), a key regulatory enzyme of glycolysis. As one of the targets of peroxisome proliferatoractivated receptor ␥ (PPAR␥), PFKFB3/iPFK2 is up-regulated by thiazolidinediones. In the present study, using PFKFB3/iPFK2-disrupted mice, the role of PFKFB3/iPFK2 in the anti-diabetic effect of PPAR␥ activation was determined. In wild-type littermate mice, PPAR␥ activation (i.e. treatment with rosiglitazone) restored euglycemia and reversed high fat diet-induced insulin resistance and glucose intolerance. In contrast, PPAR␥ activation did not reduce high fat diet-induced hyperglycemia and failed to reverse insulin resistance and glucose intolerance in PFKFB3 ؉/؊ mice. The lack of anti-diabetic effect in PFKFB3 ؉/؊ mice was associated with the inability of PPAR␥ activation to suppress adipose tissue lipolysis and proinflammatory cytokine production, stimulate visceral fat accumulation, enhance adipose tissue insulin signaling, and appropriately regulate adipokine expression. Similarly, in cultured 3T3-L1 adipocytes, knockdown of PFKFB3/iPFK2 lessened the effect of PPAR␥ activation on stimulating lipid accumulation. Furthermore, PPAR␥ activation did not suppress inflammatory signaling in PFKFB3/iPFK2-knockdown adipocytes as it did in control adipocytes. Upon inhibition of excessive fatty acid oxidation in PFKFB3/iPFK2-knockdown adipocytes, PPAR␥ activation was able to significantly reverse inflammatory signaling and proinflammatory cytokine expression and restore insulin signaling. Together, these data demonstrate that PFKFB3/iPFK2 is critically involved in the anti-diabetic effect of PPAR␥ activation.