Previous studies demonstrated that peroxisome-proliferator-activated receptor (PPAR)-α or PPAR-δ activation stimulates keratinocyte differentiation, is anti-inflammatory, and improves barrier homeostasis. Here we demonstrate that treatment of cultured human keratinocytes with ciglitazone, a PPAR-γ activator, increases involucrin and transglutaminase 1 mRNA levels. Moreover, topical treatment of hairless mice with ciglitazone or troglitazone increases loricrin, involucrin, and filaggrin expression without altering epidermal morphology. These results indicate that PPAR-γ activation stimulates keratinocyte differentiation. Additionally, PPAR-γ activators accelerated barrier recovery following acute disruption by either tape stripping or acetone treatment, indicating an improvement in permeability barrier homeostasis. Treatment with PPAR-γ activators also reduced the cutaneous inflammatory response that is induced by phorbol 12-myristate-13-acetate, a model of irritant contact dermatitis and oxazolone, a model of allergic contact dermatitis. To determine whether the effects of PPAR-γ activators are mediated by PPAR-γ, we next examined animals deficient in PPAR-γ. Mice with a deficiency of PPAR-γ specifically localized to the epidermis did not display any cutaneous abnormalites on inspection, but on light microscopy there was a modest increase in epidermal thickness associated with an increase in proliferating cell nuclear antigen (PCNA) staining. Key functions of the skin including permeability barrier homeostasis, stratum corneum surface pH, and water-holding capacity, and response to inflammatory stimuli were not altered in PPAR-γ-deficient epidermis. Although PPAR-γ activators stimulated loricrin and filaggrin expression in wild-type animals, however, in PPAR-γ-deficient mice no effect was observed indicating that the stimulation of differentiation by PPAR-γ activators is mediated by PPAR-γ. In contrast, PPAR-γ activators inhibited inflammation in both PPAR-γ-deficient and wild-type mouse skin, indicating that the inhibition of cutaneous inflammation by these PPAR-γ activators does not require PPAR-γ in keratinocytes. These observations suggest that thiazolidindiones and perhaps other PPAR-γ activators maybe useful in the treatment of cutaneous disorders.