TNF-alpha has been shown to be an important mediator of insulin resistance linked to obesity. This cytokine induces insulin resistance, at least in part, through inhibition of the tyrosine kinase activity of the insulin receptor. Recently, a new class of compounds, the antidiabetic thiazolidinediones (TZDs), has been shown to improve insulin resistance in obesity and non-insulin-dependent diabetes mellitus in both rodents and man. Here we show that TZDs have powerful effects on the ability of TNF-alpha to alter the most proximal steps of insulin signaling, including tyrosine phosphorylation of the insulin receptor and its major substrate, IRS-1, and activation of PI3-kinase. Troglitazone or pioglitazone essentially eliminate the reduction in tyrosine phosphorylation of IR and IRS-1 caused by TNF-alpha in fat cells, even at relatively high doses (25 ng/ml). That this effect of TZDs operates through activation of the nuclear receptor PPARgamma/ RXR complex is shown by the fact that similar effects are observed with other PPARgamma/RXR ligands such as 15 deoxy Delta12,14PGJ2 and LG268. The TZDs do not inhibit all TNF-alpha signaling in that the transcription factor NF-kB is still induced well. These data indicate that TZDs can specifically block certain actions of TNF-alpha related to insulin resistance, suggesting that this block may contribute to their antidiabetic actions.