Both peroxisome proliferator-activated receptor (PPAR)-gamma and hormone-sensitive lipase (HSL) play important roles in lipid metabolism and insulin sensitivity. We demonstrate that expression of the HSL gene is up-regulated by PPARgamma and PPARgamma agonists (rosiglitazone and pioglitazone) in the cultured hepatic cells and differentiating preadipocytes. Rosiglitazone treatment also results in up-regulation of the HSL gene in liver and skeleton muscle from an experimental obese rat model, accompanied by the decreased triglyceride content in these tissues. The proximal promoter (-87 bp of the human HSL gene) was found to be essential for PPARgamma-mediated transactivating activity. This important promoter region contains two GC-boxes and binds the transcription factor specificity protein-1 (Sp1) but not PPARgamma. The Sp1-promoter binding activity can be endogenously enhanced by PPARgamma and rosiglitazone, as demonstrated by analysis of EMSA and chromatin immunoprecipitation assay. Mutations in the GC-box sequences reduce the promoter binding activity of Sp1 and the transactivating activity of PPARgamma. In addition, mithramycin A, the specific inhibitor for Sp1-DNA binding activity, abolishes the PPARgamma-mediated up-regulation of HSL. These results indicate that PPARgamma positively regulates the HSL gene expression, and up-regulation of HSL by PPARgamma requires the involvement of Sp1. Taken together, this study suggests that HSL may be a newly identified PPARgamma target gene, and up-regulation of HSL may be an important mechanism involved in action of PPARgamma agonists in type 2 diabetes.