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-γ (PPAR-γ) 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-γ as a potential therapeutic target for fibrotic lung diseases remains undefined. In the present study, we show expression of PPAR-γ in fibroblasts obtained from normal human lungs and lungs of patients with idiopathic interstitial pneumonias. Treatment of lung fibroblasts and myofibroblasts with PPAR-γ agonists results in inhibition of proliferative responses and induces cell cycle arrest. In addition, PPAR-γ agonists, including a constitutively active PPAR-γ construct (VP16-PPAR-γ), inhibit the ability of transforming growth factor-β1 to induce myofibroblast differentiation and collagen secretion. PPAR-γ 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-γ is an important regulator of fibroblast/myofibroblast activation and suggest a role for PPAR-γ ligands as novel therapeutic agents for fibrotic lung diseases.