The development of alcohol-induced fatty liver is associated with a reduction of white adipose tissue (WAT). Peroxisome proliferator-activated receptor (PPAR)-γ prominently distributes in the WAT and plays a crucial role in maintaining adiposity. The present study investigated the effects of PPAR-γ activation by rosiglitazone on lipid homeostasis at the adipose tissue-liver axis. Adult C57BL/6 male mice were pair fed liquid diet containing ethanol or isocaloric maltose dextrin for 8 wk with or without rosiglitazone supplementation to ethanol-fed mice for the last 3 wk. Ethanol exposure downregulated adipose PPAR-γ gene and reduced the WAT mass in association with induction of inflammation, which was attenuated by rosiglitazone. Ethanol exposure stimulated lipolysis but reduced fatty acid uptake capacity in association with dysregulation of lipid metabolism genes. Rosiglitazone normalized adipose gene expression and corrected ethanol-induced lipid dyshomeostasis. Ethanol exposure induced steatosis and upregulated inflammatory genes in the liver, which were attenuated by rosiglitazone. Hepatic peroxisomal fatty acid β-oxidation was suppressed by ethanol in associated with inhibition of acyl-coenzyme A oxidase 1. Rosiglitazone elevated plasma adiponectin level and normalized peroxisomal fatty acid β-oxidation rate. However, rosiglitazone did not affect ethanol-reduced very low-density lipoprotein secretion from the liver. These results demonstrated that activation of PPAR-γ by rosiglitazone reverses ethanol-induced adipose dysfunction and lipid dyshomeostasis at the WAT-liver axis, thereby abrogating alcoholic fatty liver.