The recent discovery that peroxisome proliferator-activated receptor γ (PPARγ) targeted anti-diabetic drugs function by inhibiting Cdk5-mediated phosphorylation of the receptor has provided a new viewpoint to evaluate and perhaps develop improved insulin-sensitizing agents. Herein we report the development of a novel thiazolidinedione that retains similar anti-diabetic efficacy as rosiglitazone in mice yet does not elicit weight gain or edema, common side effects associated with full PPARγ activation. Further characterization of this compound shows GQ-16 to be an effective inhibitor of Cdk5-mediated phosphorylation of PPARγ. The structure of GQ-16 bound to PPARγ demonstrates that the compound utilizes a binding mode distinct from other reported PPARγ ligands, although it does share some structural features with other partial agonists, such as MRL-24 and PA-082, that have similarly been reported to dissociate insulin sensitization from weight gain. Hydrogen/deuterium exchange studies reveal that GQ-16 strongly stabilizes the β-sheet region of the receptor, presumably explaining the compound's efficacy in inhibiting Cdk5-mediated phosphorylation of Ser-273. Molecular dynamics simulations suggest that the partial agonist activity of GQ-16 results from the compound's weak ability to stabilize helix 12 in its active conformation. Our results suggest that the emerging model, whereby "ideal" PPARγ-based therapeutics stabilize the β-sheet/Ser-273 region and inhibit Cdk5-mediated phosphorylation while minimally invoking adipogenesis and classical agonism, is indeed a valid framework to develop improved PPARγ modulators that retain antidiabetic actions while minimizing untoward effects.