Peroxisome proliferator-activated receptor gamma (PPARγ) is a valuable drug target for diabetic treatment and ligands of PPARγ have shown potent anti-diabetic efficacy. However, to overcome the severe side effects of current PPARγ-targeted drugs, novel PPARγ ligands need to be developed. Sulindac, an identified ligand of PPARγ, is widely used in clinic as a non-steroidal anti-inflammatory drug. To explore its potential application for diabetes, we designed and synthesized a series of sulindac derivatives to investigate their structure-activity relationship as PPARγ ligand and potential anti-diabetic effect. We found that meta-substitution in sulindac's benzylidene moiety was beneficial to PPARγ binding and transactivation. Z rather than E configuration of the benzylidene double bond endowed derivatives with the selectivity of PPARγ activation. The indene fluorine is essential for binding and regulating PPARγ. Compared with rosiglitazone, compound 6b with benzyloxyl meta-substitution and Z benzylidene double bond weakly induced adipogenesis and PPARγ-targeted gene expression. However, 6b potently improved glucose tolerance in a diabetic mice model. Unlike rosiglitazone, 6b was devoid of apparent toxicity to osteoblastic formation. Thus, we provided some useful guidelines for PPARγ-based optimization of sulindac and an anti-diabetic lead compound with less side effects.