Nuclear receptor peroxisome proliferator-activated receptor γ (PPARγ) plays an important role in the regulation of glucose homeostasis and lipid metabolism. However, current PPARγ-targeting drugs such as thiazolidinediones (TZDs) are associated with undesirable side effects. We identified a small molecular compound, F12016, as a selective PPARγ agonist by virtual screening, which showed moderate PPARγ agonistic activity and binding ability for PPARγ. F12016 did not activate other PPAR subtypes at 30 μM and selectively modulated PPARγ target gene expression. In diabetic KKAy mice, F12016 had insulin-sensitizing and glucose-lowering properties, and suppressed weight gain. In vitro, F12016 effectively increased glucose uptake and blocked cyclin-dependent kinase 5-mediated phosphorylation of PPARγ at Ser273, but slightly triggered adipogenesis and less inhibited osteoblastogenesis than rosiglitazone. Moreover, compared with the full agonist rosiglitazone, F12016 had a distinct group of coregulators and a different predicted binding mode for the PPARγ ligand-binding domain. A site mutation assay confirmed the key epitopes, especially Tyr473 in AF-2. In summary, our study shows that F12016 is a non-TZD, novel selective PPARγ agonist without the classical lipogenic side effects, which may provide a new structural strategy for designing PPARγ ligands with advantages over TZDs.