From an initial perception that a disorder of glucose metabolism was the primary event in the pathogenesis of type 2 diabetes, there is now a growing appreciation that chronic elevation of FFA levels is an early event that contributes to the development of this disease. FFAs induce insulin resistance, which increases with FFA levels, and this can be a beneficial adaptive response during starvation and pregnancy. However, insulin resistance can become counterproductive when there is an excess of energy intake associated with physical inactivity. The extra fuel is stored in visceral and subcutaneous fat depots. As fat accumulates, there is an ongoing increase in the levels of plasma FFAs, which causes insulin resistance. In addition, the deficit of another product of adipose tissue (e.g., adiponectin) may contribute to increased insulin resistance. To counter insulin resistance and prevent hyperglycemia, insulin levels increase. In individuals with a genetic predisposition for diabetes, however, the pancreas cannot compensate for the increased secretory demands placed on it, resulting in type 2 diabetes. The pivotal role of FFAs in the development of insulin resistance and type 2 diabetes suggests that the optimal therapeutic intervention should decrease plasma FFA levels. The PPAR family is intimately involved in lipid metabolism. Two subtypes of these receptors are the site of action of synthetic PPAR agonists: PPAR-α and PPAR-γ. The former increases fatty acid oxidation, whereas the latter results in the redistribution of fat from visceral to subcutaneous body fat and an increase in adiponectin. The outcome of activation of PPAR-γ is a lowering of plasma FFA concentrations and improved insulin sensitivity. The effects of PPAR-α on lipid metabolism may also bring about improvements in insulin sensitivity. The currently available PPAR agonists selectively activate either PPAR-α (i.e., fibrates) or PPAR-γ (i.e., TZDs) and have been shown to improve lipid metabolism. It may be that dual agonism with PPAR-α/γ agonists will provide additional benefits above and beyond those achieved with sole activation of either PPAR-α or PPAR-γ.