Tithonia diversifolia is a well-known traditional Chinese medicine treating diabetes, hepatitis, and hepatocarcinoma but its molecular mechanism is not fully understood. Peroxisome proliferator-activated receptors (PPARs) α and γ are members of nuclear receptor superfamily. Their agonists are prescribed as antihyperlipidemic and antihyperglycemic drugs now. In this study, sesquiterpene lactones, tirotundin and tagitinin A, were isolated from T. diversifolia and evaluated for their activity against PPARs by the transient transfection reporter assay. Tirotundin and tagitinin A transactivated PPARγ dependent promoters including PPRE (PPARγ response element), SHP, and ABCA1 gene promoters in dose-dependent manner. Furthermore, the fluorescence polarization competitive binding assay showed that tirotundin (IC(50)=27 μM) and tagitinin A (IC(50)=55 μM) enhanced PPARγ transactivation activity by directly binding to PPARγ ligand binding domain. Additionally, they stimulated the transactivation of PPARα dependent SULT2A1 gene promoter by 2.3-fold of vehicle effect at 10 μM. These results highly indicated that tirotundin and tagitinin A are the active components of T. diversifolia to exert anti-diabetic effect through PPARγ pathway. Moreover, these sesquiterpene lactones behaved as PPARα/γ dual agonists so they might be useful as the potential herbal treatment for diabetes.