Peroxisome proliferator-activated receptor gamma (PPAR-gamma) plays a key role in adipocyte differentiation and insulin sensitivity. Its synthetic ligands, the thiazolidinediones (TZD), are used as insulin sensitizers in the treatment of type 2 diabetes. These compounds induce both adipocyte differentiation in cell culture models and promote weight gain in rodents and humans. Here, we report on the identification of a new synthetic PPARgamma antagonist, the phosphonophosphate SR-202, which inhibits both TZD-stimulated recruitment of the coactivator steroid receptor coactivator-1 and TZD-induced transcriptional activity of the receptor. In cell culture, SR-202 efficiently antagonizes hormone- and TZD-induced adipocyte differentiation. In vivo, decreasing PPARgamma activity, either by treatment with SR-202 or by invalidation of one allele of the PPARgamma gene, leads to a reduction of both high fat diet-induced adipocyte hypertrophy and insulin resistance. These effects are accompanied by a smaller size of the adipocytes and a reduction of TNFalpha and leptin secretion. Treatment with SR-202 also dramatically improves insulin sensitivity in the diabetic ob/ob mice. Thus, although we cannot exclude that its actions involve additional signaling mechanisms, SR-202 represents a new selective PPARgamma antagonist that is effective both in vitro and in vivo. Because it yields both antiobesity and antidiabetic effects, SR-202 may be a lead for new compounds to be used in the treatment of obesity and type 2 diabetes.