Peroxisome proliferator-activated receptor-gamma (PPAR-gamma) is highly expressed in lipid-accumulating macrophages of the coronary artery. In light of this, the wide-spread clinical use of thiazolidinediones (TZDs) in the treatment of type II diabetes raises concerns about the role of PPAR-gamma in macrophage function and disease progression. To define the role of PPAR-gamma in macrophage biology, we used homologous recombination to create embryonic stem cells that were homozygous for a null mutation in the PPAR-gamma gene. We demonstrate here that PPAR-gamma is neither essential for nor substantially affects the development of the macrophage lineage both in vitro and in vivo. In contrast, we show it is an important regulator of the scavenger receptor CD36, which has been genetically linked to lipid accumulation in macrophages. Both 15-deoxy-Delta12,14prostaglandin J2 and thiazolidinediones have anti-inflammatory effects that are independent of PPAR-gamma. We show that PPAR-gamma is required for positive effects of its ligands in modulating macrophage lipid metabolism, but that inhibitory effects on cytokine production and inflammation may be receptor independent.