We have identified a novel variant of human peroxisome proliferator-activated receptor gamma (hPPARgamma), derived from insertion of a novel exon 3'. Insertion leads to the introduction of a premature stop codon, resulting in the formation of a truncated splice variant of PPARgamma1 (PPARgamma1(tr)). Western blot analysis confirmed the presence of PPARgamma1(tr) in tumor-derived cell lines. Although PPARgamma1(tr) interfered with transcriptional activity of wild-type PPARgamma1 (PPARgamma1(wt)), activity could be rescued by cotransfection with a vector expressing p300. Overexpression of PPARgamma1(tr) protein in CHO cells greatly enhanced their proliferation and anchorage-independent colony growth on soft agar. These data demonstrate that PPARgamma1(tr) is an important physiologic isoform of PPARgamma that modulates cellular functions of PPARgamma1(wt).