The contribution of peroxisomal proliferator-activated receptor (PPAR)-γ agonism in pancreatic β-cells to the antidiabetic actions of thiazolidinediones has not been clearly elucidated. Genetic models of pancreatic β-cell PPARγ ablation have revealed a potential role for PPARγ in β-cell expansion in obesity but a limited role in normal β-cell physiology. Here we overexpressed PPARγ1 or PPARγ2 specifically in pancreatic β-cells of mice subjected to high-fat feeding using an associated adenovirus (β-PPARγ1-HFD and β-PPARγ2-HFD mice). We show β-cell-specific PPARγ1 or PPARγ2 overexpression in diet-induced obese mice exacerbated obesity-induced glucose intolerance with decreased γ-cell mass, increased islet cell apoptosis, and decreased plasma insulin compared with obese control mice (γ-eGFP-HFD mice). Analysis of islet lipid composition in β-PPARγ2-HFD mice revealed no significant changes in islet triglyceride content and an increase in only one of eight ceramide species measured. Interestingly β-PPARγ2-HFD islets had significantly lower levels of lysophosphatidylcholines, lipid species shown to enhance insulin secretion in γ-cells. Gene expression profiling revealed increased expression of uncoupling protein 2 and genes involved in fatty acid transport and β-oxidation. In summary, transgenic overexpression of PPARδ in β-cells in diet-induced obesity negatively impacts whole-animal carbohydrate metabolism associated with altered islet lipid content, increased expression of β-oxidative genes, and reduced β-cell mass.