Pulmonary fibrosis is characterized by alterations in fibroblast phenotypes resulting in excessive extracellular matrix accumulation and anatomic remodeling. Current therapies for this condition are largely ineffective. Peroxisome proliferator-activated receptor-gamma (PPAR-gamma) is a member of the nuclear hormone receptor superfamily, the activation of which produces a number of biological effects, including alterations in metabolic and inflammatory responses. The role of PPAR-gamma as a potential therapeutic target for fibrotic lung diseases remains undefined. In the present study, we show expression of PPAR-gamma in fibroblasts obtained from normal human lungs and lungs of patients with idiopathic interstitial pneumonias. Treatment of lung fibroblasts and myofibroblasts with PPAR-gamma agonists results in inhibition of proliferative responses and induces cell cycle arrest. In addition, PPAR-gamma agonists, including a constitutively active PPAR-gamma construct (VP16-PPAR-gamma), inhibit the ability of transforming growth factor-beta1 to induce myofibroblast differentiation and collagen secretion. PPAR-gamma agonists also inhibit fibrosis in a murine model, even when administration is delayed until after the initial inflammation has largely resolved. These observations indicate that PPAR-gamma is an important regulator of fibroblast/myofibroblast activation and suggest a role for PPAR-gamma ligands as novel therapeutic agents for fibrotic lung diseases.