PFKFB3 is the gene that codes for the inducible isoform of 6-phosphofructo-2-kinase (iPFK2), a key regulatory enzyme of glycolysis. As one of the targets of peroxisome proliferator-activated receptor gamma (PPARgamma), PFKFB3/iPFK2 is up-regulated by thiazolidinediones. In the present study, using PFKFB3/iPFK2-disrupted mice, the role of PFKFB3/iPFK2 in the anti-diabetic effect of PPARgamma activation was determined. In wild-type littermate mice, PPARgamma activation (i.e. treatment with rosiglitazone) restored euglycemia and reversed high fat diet-induced insulin resistance and glucose intolerance. In contrast, PPARgamma activation did not reduce high fat diet-induced hyperglycemia and failed to reverse insulin resistance and glucose intolerance in PFKFB3(+/-) mice. The lack of anti-diabetic effect in PFKFB3(+/-) mice was associated with the inability of PPARgamma activation to suppress adipose tissue lipolysis and proinflammatory cytokine production, stimulate visceral fat accumulation, enhance adipose tissue insulin signaling, and appropriately regulate adipokine expression. Similarly, in cultured 3T3-L1 adipocytes, knockdown of PFKFB3/iPFK2 lessened the effect of PPARgamma activation on stimulating lipid accumulation. Furthermore, PPARgamma activation did not suppress inflammatory signaling in PFKFB3/iPFK2-knockdown adipocytes as it did in control adipocytes. Upon inhibition of excessive fatty acid oxidation in PFKFB3/iPFK2-knockdown adipocytes, PPARgamma activation was able to significantly reverse inflammatory signaling and proinflammatory cytokine expression and restore insulin signaling. Together, these data demonstrate that PFKFB3/iPFK2 is critically involved in the anti-diabetic effect of PPARgamma activation.