Conjugated linoleic acid (CLA) is a naturally occurring fatty acid which has anti-carcinogenic and anti-atherogenic properties. CLA activates PPAR alpha in liver, and shares functional similarities to ligands of PPAR gamma, the thiazolidinediones, which are potent insulin sensitizers. We provide the first evidence that CLA is able to normalize impaired glucose tolerance and improve hyperinsulinemia in the pre-diabetic ZDF rat. Additionally, dietary CLA increased steady state levels of aP2 mRNA in adipose tissue of fatty ZDF rats compared to controls, consistent with activation of PPAR gamma. The insulin sensitizing effects of CLA are due, at least in part, to activation of PPAR gamma since increasing levels of CLA induced a dose-dependent transactivation of PPAR gamma in CV-1 cells cotransfected with PPAR gamma and PPRE X 3-luciferase reporter construct. CLA effects on glucose tolerance and glucose homeostasis indicate that dietary CLA may prove to be an important therapy for the prevention and treatment of NIDDM.