Peroxisome proliferator-activated receptors (PPARs) belong to the nuclear steroid receptor superfamily. Originally, the receptors were identified as critical controllers for several key enzymes that catalyze the oxidation of fatty acids. PPARs consist of three members: PPAR-alpha, PPAR-beta/delta, and PPAR-gamma. Among them, PPAR-gamma is essential for controlling thermogenesis and adipocyte differentiation. The ligands for PPAR-gamma include 15-deoxy-delta(12,14)-prostaglandin J2 (15d-PGJ2)--a metabolite from the prostaglandin synthesis pathway, and "glitazones"--drugs utilized in the treatment of patients with diabetes. The precursors for prostaglandins are fatty acids consumed from diet and these precursors have long been postulated to have a regulatory role in immune functions. Emerging evidence indicates that PPAR-gamma and its ligands are indeed important for the modulation of immune and inflammatory reactions. In this review, we will spotlight the molecular mechanisms of receptor/ligand function and how they may regulate immune and inflammatory reactions. We also propose that PPAR-gamma and its endogenous ligands are participating factors for Type 1/Type 2 T and NK cell differentiation and development. Deciphering the mechanism of action of PPAR-gamma and its ligands may lead to a new therapeutic regiment for treatment of diseases involving dysfunction of the immune system.