Peroxisome proliferator-activated receptors (PPARs) play crucial roles in glucose and lipid metabolism and inflammation. Sanguinarine is a natural product that is isolated from Sanguinaria Canadensis, a potential therapeutic agent for intervention in chronic diseases. In this study, biochemical and cell-based promoter-reporter gene assays revealed that sanguinarine activated both PPARalpha and PPARgamma, and enhanced their transcriptional activity; thus, sanguinarine was identified as a dual agonist of PPARalpha/gamma. Similar to fenofibrate, sanguinarine upregulates the expression of PPARalpha-target genes in hepatocytes. Sanguinarine also modulates the expression of key PPARgamma-target genes and promotes adipocyte differentiation, but with a lower adipogenic activity compared with rosiglitazone. We report the crystal structure of sanguinarine bound to PPARalpha, which reveals a unique ligand-binding mode of sanguinarine, dissimilar to the classic Y-shaped binding pocket, which may represent a new pharmacophore that can be optimized for selectively targeting PPARalpha. Further structural and functional studies uncover the molecular basis for the selectivity of sanguinarine toward PPARalpha/gamma among all three PPARs. In summary, our study identifies a PPARalpha/gamma dual agonist with a unique ligand-binding mode, and provides a promising and viable novel template for the design of dual-targeting PPARs ligands.