The nuclear receptor Peroxisome Proliferator Activated Receptor gamma (PPARg) is a promising target for the treatment of type 2 diabetes. Previous drug design efforts have focused on activating ligands of the receptor and were withdrawn from clinical use due to adverse side effects associated with broad upregulation of PPARg-controlled genes, including those not contributing to the anti-diabetic properties of the drug. However, the impressive antidiabetic effectiveness of compounds targeting PPARg warrants continued efforts in fine tuning PPARg-targeting therapeutics. Non-activating ligands of PPARg have shown improvements in their side effect profile and maintain insulin sensitising properties consistent with activating ligands, making them a lucrative alternative for the treatment of type 2 diabetes. However, the molecular mechanisms governing the activating potential of PPARg ligands, and therefore their potential to cause side effects, has been poorly understood and warranted a comprehensive structural and biochemical investigation. We have solved crystal structures in combination with native mass spectrometry and electron paramagnetic resonance to capture a holistic insight into the mechanism of non-activating ligands with good antidiabetic potential and low side effect profile. Initial crystal structures showed the first instance of a conformational change in the ligand binding domain of PPARg; a shift of the activation helix to an inactive conformation. Details of the crystal structures reveal how the binding interactions of these ligands differ from activating ligands, affording them this capacity to cause a conformational change in PPARg. Further structural investigation revealed that this shift in the activation helix enables the recruitment of transcriptionally-repressing corepressors, which limits the expression of genes causing adverse side effects. Elucidation of this mechanism has enabled a better understanding of the highly specific and therapeutically impactful relationship between PPARg, a receptor with huge therapeutic potential, and the diverse range of compounds that interact with it. This knowledge can be implemented into future drug design efforts to develop effective and safer treatments for type 2 diabetes.