Peroxisome proliferator-activated receptors (PPARs) are nuclear hormone receptors, initially described as molecular targets for synthetic compounds that induce peroxisome proliferation. PPAR% is the best characterized of the PPARs. The heterodimer of PPAR% with the retinoid X receptor (RXR) plays a crucial role in adipogenesis and insulin sensitization. The RXR/PPAR% heterodimer furthermore has been reported to have important immunomodulatory activities and to affect cell proliferation/differentiation pathways in various malignancies. PPAR% is activated by a number of naturally occurring fatty acid derivatives and by several synthetic compounds, including the thiazolidinediones and L-tyrosine-based insulin sensitizers. This review gives an overview of the pleiotropic functions of PPAR% and discusses the wide-ranging medical implications that modulation of PPAR% activity might have for various diseases, ranging from obesity and type 2 diabetes to cancer and inflammation.