Both type 2 diabetes (T2DM) and familial combined hyperlipidemia have been mapped to human chromosome 1q21-q24. This region includes the retinoid X receptor gamma (RXRgamma), which is a strong candidate for both glucose and lipid metabolism. Retinoid X receptors form heterodimers with a variety of nuclear receptors, including peroxisome-proliferator-activated receptors alpha and gamma (PPARalpha and PPARgamma), and are synergistic targets for drugs that alter glucose and lipid metabolism. We hypothesized that RXRgamma variation could explain the linkage of diabetes and lipid disorders to this region. We screened each of the 10 exons, the flanking intronic sequences, the 3' untranslated region, and the 5' flanking region. We identified 14 variants, none of which altered the coding sequence. Of the 10 variants examined in a diabetes case-control study, three showed nominal (p < 0.05) associations with T2DM. We subsequently typed four variants in all members of the 63 multiplex families used in our previous linkage analysis. No individual variant showed excess transmission to offspring with T2DM using a transmission disequilibrium test and only a single rare haplotype showed evidence of an association with T2DM. Likewise, neither individual variants nor haplotypes were associated with either fasting or post-challenge glucose in non-diabetic subjects. In contrast, three of the four variants were associated with fasting free fatty acid (FFA) levels (p = 0.024-0.00044) and two variants were associated with triglyceride levels (p < 0.05). These findings were supported by the association of several haplotypes with FFA and triglyceride levels. RXRgamma haplotypes were also associated with several measures of pancreatic beta-cell function, consistent with the proposed role of lipid metabolism in insulin secretion. These data suggest that RXRgamma may contribute to disordered lipid metabolism in members of familial T2DM kindreds, but this gene is unlikely to explain the linkage of T2DM with this region.