The aim of this study was to investigate the association of four single nucleotide polymorphisms (SNPs) of peroxisome proliferator-activated receptor gamma (PPARG) with type 2 diabetes mellitus (T2DM) risk and additional role of gene-obesity interaction. Four SNPs were selected for genotyping in the case-control study: rs1805192, rs709158, rs3856806 and rs4684847. Generalized multifactor dimensionality reduction (GMDR) model and logistic regression was used to examine the interaction between SNP and obesity on T2DM, odds ratio (OR) and 95% confident interval (95% CI) were calculated. T2DM risk was significantly higher in individuals with rs1805192-G allele (p < 0.05). The carriers of G allele of the rs1805192 polymorphism revealed increased T2DM risk than those with CC variants (CG + GG versus CC, adjusted OR (95% CI) 1.76 (1.45-2.06), p < 0.001). T2DM risk was also significantly higher in individuals with rs3856806-T allele (p < 0.05). The carriers of T allele of the rs3856806 polymorphism revealed increased T2DM risk than those with CC variants (CT + TT versus CC, adjusted OR (95% CI) 1.25 (1.17-1.76), p < 0.001). There was a significant two-locus model (p = 0.0107) involving rs1805192 and obesity. Obese subjects with CG or GG genotype have the highest T2DM risk, compared to subjects with CC genotype and normal BMI (OR 2.40, 95% CI 1.68-3.63). Our results support an important association between rs1805192 and rs3856806 minor allele (G allele) of PPARG and increased T2DM risk, the interaction analysis shown a combined effect of G- obesity interaction between rs1805192 and obesity on increased T2DM risk.