Activation of peroxisome proliferator-activated receptor gamma (PPAR gamma) after balloon injury significantly inhibits VSMC proliferation and neointima formation. However, the precise mechanisms of this inhibition have not been determined. We hypothesized that activation of PPAR gamma in vascular injury could attenuate VSMC growth and matrix production during vascular lesion formation. Since connective tissue growth factor (CTGF) is a key factor regulating extracellular matrix production, abrogation of transforming growth factor beta (TGF-beta)-induced CTGF production by PPAR gamma activation may be one of the mechanisms through which PPAR gamma agonists inhibit neointima formation after vascular injury. In this study, we demonstrate that the PPAR gamma natural ligand (15-deoxyprostaglandin J(2)) and a synthetic ligand (GW7845) significantly inhibit TGF-beta-induced CTGF production in a dose-dependent manner in HASMCs. In addition, suppression of CTGF mRNA expression is relieved by pretreatment with an antagonist of PPAR gamma (GW9662), suggesting that the inhibition of CTGF expression is mediated by PPAR gamma. To elucidate further the molecular mechanism by which PPAR gamma inhibits CTGF expression, an approximately 2-kilobase pair CTGF promoter was cloned. We found that PPAR gamma activation inhibits TGF-beta-induced CTGF promoter activity in a dose-dependent manner, and suppression of CTGF promoter activity by PPAR gamma activation is completely rescued by overexpression of Smad3, but not by Smad4. Furthermore, PPAR gamma physically interacts with Smad3 but not Smad4 in vitro in glutathione S-transferase pull-down experiments. Taken together, the data suggest that PPAR gamma inhibits TGF-beta-induced CTGF expression in HASMCs by directly interfering with the Smad3 signaling pathway.