Abstract Background Peroxisome proliferator-activated receptor γ (PPARγ) is a ligand-activated transcription factor, which regulates gene expression of the key proteins involved in lipid metabolism, vascular inflammation, and proliferation. PPARγ may contribute to attenuating atherogenesis and postangioplasty restenosis. PPARγ C161→T substitution is associated with a reduced risk of coronary artery disease (CAD). Whether or not the gene substitution alters the risk of CAD in type 2 diabetes mellitus (T2DM) patients remains unclear. Methods A total of 556 unrelated subjects from a Chinese Han population, including 89 healthy subjects, 78 CAD patients, 86 T2DM patients, and 303 CAD combined with T2DM patients, were recruited to enroll in this study. PPARγC161→T gene polymorphism was determined by polymerase chain reaction and restriction fragment length polymorphisms. Plasma levels of lipoproteins, apolipoproteins, glucose, and insulin were measured by ELISA or radioimmunoassay (RIA). The coronary artery lesions were evaluated by coronary angiography. Results The frequency of the 161T allele in CAD, T2DM, and CAD combined with T2DM patients was similar to that observed in the healthy control group. However, in CAD combined with T2DM patients, the group with angiographically documented moderate stenoses had a higher frequency of the 161T allele in comparison to the group with severe stenoses (P < 0.05). Moreover, in CAD with T2DM patients, the triglyceride levels and apoB in CC homozygote carriers were significantly higher than those in "T" allele carriers. Conclusions PPARγC161→T genotypes weren't significantly associated with the risk of CAD, but were markedly correlated with severity of disease vessels in patients with CAD and T2DM. Furthermore, PPARγC161→T substitution was associated with an altered adipose, but not glucose metabolism. These results indicate that the PPARγ C161→T polymorphism may reduce the risk of severe atherogenesis by modulation of adipose metabolism, especially triglycerides and apoB, in Chinese patients with CAD and T2DM.