Transforming growth factor beta (TGF beta) and peroxisome proliferator-activated receptor gamma (PPAR gamma) play major roles in the development of vascular diseases. It has been documented that PPAR gamma activation inhibits the TGF beta signal pathway in vascular smooth muscle cells (VSMC). Here we examined whether TGF beta can regulate PPAR gamma expression. Northern blot analyses revealed that both TGF beta 1 and 2 exert a biphasic effect (early stimulation and late repression) on PPAR gamma gene expression in VSMC. TGF beta rapidly and transiently induced early growth-response factor-1 (Egr-1) expression through the mitogen-activated protein kinase/extracellular signal-regulated kinase kinase 1 (MEK1)/ERK-mediated pathway. Inhibition of MEK1/ERK by PD98059 not only abrogated the induction of Egr-1 but also abolished the rapid and transient induction of PPAR gamma by TGF beta. Furthermore, overexpression of NAB2, a repressor of Egr-1 activation, also blocked the induction of PPAR gamma by TGF beta in VSMC, suggesting that Egr-1 mediates the rapid and transient induction of PPAR gamma by TGF beta. With regard to the TGF beta repression of PPAR gamma expression, activator protein 1 (AP1) and Smad3/4 dramatically inhibited the PPAR gamma promoter activity in transient-transfection studies. In contrast, adenovirus-mediated overexpression of a dominant-negative form of c-Jun partially rescued the TGF beta-induced PPAR gamma repression in VSMC. Taken together, our data demonstrate that Egr-1, AP1 and Smad are part components of the TGF beta signal transduction pathway that regulates PPAR gamma expression.