Peroxisome proliferator-activated receptor-γ (PPAR-γ), a member of the nuclear hormone receptor family of ligand-dependent transcription factors, is a critical regulator of adipocyte differentiation and glucose metabolism. The expression, regulation, and functional significance of PPAR-γ in alveolar macrophages (AMs), the predominant resident immune effector cell within the alveolus, have not been previously examined. In this study, we show that, in contrast to peritoneal macrophages, resident murine AMs constitutively express high levels of PPAR-γ. Expression was primarily located in the nucleus by immunofluorescence staining. Quantitative real-time RT-PCR demonstrated that the predominant isoform was PPAR-γ2. Expression of PPAR-γ was induced by the anti-inflammatory cytokine IL-4. Treatment of murine AMs with PPAR-γ ligands suppresses PMA-stimulated oxidative burst activity and LPS + IFN-γ-mediated expression of inducible nitric oxide synthase. In addition, LPS-induced IL-12 mRNA and protein expression was inhibited by PPAR-γ ligands. These results support an important immunomodulatory role for PPAR-γ in AM responses.