The previous failures of peroxisome proliferator-activated receptor gamma (PPARg)-activating drugs against type two diabetes (T2DM) have highlighted the need for alternatives that lack transcriptionally-promoting activity on PPARg. It has been shown that high-affinity non-activating ligands of the nuclear receptor promote potent insulin sensitivity to combat T2DM, but without the harmful or even fatal side effects associated with full activation of the receptor. A robust understanding of the underlying structural mechanisms determining the level of receptor activation induced by ligands has long evaded researchers. We have solved the crystal structure of an antagonist and an inverse agonist in complex with the ligand binding domain of PPARg, which reveal the first instance of a global structural change in PPARg crystal structures. The non-activating ligands of PPARg attract helix 12 (the activation helix) away from the coactivator binding surface of the LBD, which in turn enables the formation of a larger binding pocket which can accommodate binding of transcriptionally-repressing corepressors. Interestingly, this mechanism is distinct from other nuclear receptors such as estrogen receptor and PPARa. This work highlights a major development in the field of PPARg research, as well as the wider nuclear receptor field for its unique mechanism and clinical relevance to the treatment of T2DM.