Type 2 diabetes mellitus (T2DM), characterized by insulin resistance and β-cell dysfunction, is a complex, multifactorial disease, which has become a worldwide epidemic in the 21st century. Twin and family studies have revealed a strong genetic component of T2DM, and a number of candidate genes such as the peroxisome proliferator-activated receptor γ (PPARγ) and CAPN10, have been identified in human populations. Previous studies also indicate that body mass index, dietary factors (e.g. fat/vegetable intake, high/low glycemic-load diet), as well as lifestyle variables (e.g. sedentary behavior, prolonged television viewing) are associated with an increased risk of T2DM. Therefore, the interaction between genetic and dietary/lifestyle factors may play a central role in the pathogenesis of T2DM. In this review, we focus on the PPAR pathway to illustrate how molecular variants of genes belonging to this pathway may respond differently to various dietary signals on the risk of T2DM, because they serve as nutrient sensors. The key molecules involved in this pathway include PPARα, which plays a significant role in the regulation of nutrient metabolism especially fatty acid oxidation, PPARγ, which is primarily expressed in adipose tissue where it stimulates adipogenesis and lipogenesis, and PPARγ coactivator 1α (PGC-1α), which is involved in regulation of gluconeogenesis. Drugs that target PPARγ - thiazolidinedione (TZD), have now been widely used in the treatment of T2DM. Well delineate in detail how genetic variants of molecules in the PPAR pathway may modify the response to TZD in T2DM patients.