Abnormalities in fatty acid (FA) metabolism underlie the development of insulin resistance and alterations in glucose metabolism, features characteristic of the metabolic syndrome and type 2 diabetes that can result in an increased risk of cardiovascular disease. We present pharmacodynamic effects of AZ 242, a novel peroxisome proliferator activated receptor (PPAR)alpha/gamma agonist. AZ 242 dose-dependently reduced the hypertriglyceridemia, hyperinsulinemia, and hyperglycemia of ob/ob diabetic mice. Euglycentic hyperinsulinemic clamp studies showed that treatment with AZ 242 (1 mumol/kg/d) restored insulin sensitivity of obese Zucker rats and decreased insulin secretion. In vitro, in reporter gene assays, A-Z 242 activated human PPARalpha and PPARgamma with EC50 in the mumolar range. It also induced differentiation in 3T3-L1 cells, an established PPARgamma effect, and caused up-regulation of liver fatty acid binding protein in HepG-2 cells, a PPARalpha-mediated effect. PPARalpha-mediated effects of AZ 242 in vivo were documented by induction of hepatic cytochrome P 450-4A in mice-EM The results indicate that the dual PPARalpha/gamma agonism of AZ 242 reduces insulin resistance and has beneficial effects on FA and glucose metabolism. This effect profile could provide a suitable therapeutic approach to the treatment of type 2 diabetes, metabolic syndrome, and associated vascular risk factors.