Binding to receptors in the cell nucleus is crucial for the action of lipophilic hormones and ligands. PPAR-gamma (for peroxisome proliferator-activated receptor) is a nuclear hormone receptor that mediates adipocyte differentiation(1,2) and modulates insulin sensitivity(3), cell proliferation(4) and inflammatory processes(5,6). PPAR-gamma ligands have been implicated in the development of atherogenic foam cells(7) and as potential cancer treatments(8). Transcriptional activity of PPAR-gamma is induced by binding diverse ligands, including natural fatty acid derivatives(9-11), antidiabetic thiazolidinediones(12), and non-steroidal anti-inflammatory drugs(13). Ligand binding by PPAR-gamma, as well as by the entire nuclear-receptor superfamily, is an independent property of the carboxy-terminal ligand-binding domain (LBD) of the receptor(14,15). Here we show that ligand binding by PPAR-gamma is regulated by intramolecular communication between its amino-terminal A/B domain and its carboxy-terminal LED. Modification of the A/B domain, for example by physiological phosphorylation by MAP kinase, reduces ligand-binding affinity, thus negatively regulating the transcriptional and biological functions of PPAR-gamma. The ability of the A/B domain to regulate ligand binding has important implications for the evaluation and mechanism of action of potentially therapeutic ligands that bind PPAR-gamma and that are likely to extend to other members of the nuclear-receptor superfamily.