A structure-based pharmacophore generation approach was employed to identify novel structural characteristics and scaffolds for peroxisome proliferator-activated receptor γ (PPARγ). The structure-based six feature pharmacophore hypothesis generated in the present study signifies the importance of hydrogen bond donors, hydrogen bond acceptors and hydrophobic interaction between the PPARγ structure and its agonists. The interaction shown by the compounds provides an important insight into the mechanism involved in the ligand receptor interaction. The model will aid in the development of oral hypoglycemic agents with improved efficacy and reduced side effects and can be used to search comparatively larger compound libraries/databases to retrieve more potent and structurally diverse group of compounds.