Vanadium compounds are promising agents in the therapeutic treatment of diabetes; however, their mechanism of action has not been clearly elucidated. The current study investigated the effects of vanadium compounds, vanadyl acetylacetonate [V(IV)O(acac)2] and sodium metavanadate (NaV(V)O3), on peroxisome proliferator-activated receptors (PPARs), especially PPARγ, which are important targets of anti-diabetic drugs. Our experimental results revealed that treatment of NIT-1 β-pancreas cells with vanadium compounds resulted in PPARγ activation and elevation of PPARγ protein levels. Vanadium compounds did not increase PPARγ transcription but ameliorated PPARγ degradation induced by inflammatory stimulators TNF-α/IL-6. Vanadium compounds induced binding of PPARγ to heat shock protein (Hsp60). This PPARγ-Hsp60 interaction might cause inhibition of PPARγ degradation, thus elevating the PPARγ level. In addition, modulation of PPARγ phosphorylation was also observed upon vanadium treatment. The present work demonstrated for the first time that vanadium compounds are novel PPARγ modulators. The results may provide new insights for the mechanism of anti-diabetic action of vanadium compounds.