Peroxisome proliferator-activated receptor gamma (PPARgamma) and transforming growth factor-beta (TGF-beta) are key regulators of epithelial cell biology. However, the molecular mechanisms by which either pathway induces growth inhibition and differentiation are incompletely understood. We have identified transforming growth factor-simulated clone-22 (TSC-22) as a target gene of both pathways in intestinal epithelial cells. TSC-22 is member of a family of leucine zipper containing transcription factors with repressor activity. Although little is known regarding its function in mammals, the Drosophila homolog of TSC-22, bunched, plays an essential role in fly development. The ability of PPARgamma to induce TSC-22 was not dependent on an intact TGF-beta1 signaling pathway and was specific for the gamma isoform. Localization studies revealed that TSC-22 mRNA is enriched in the postmitotic epithelial compartment of the normal human colon. Cells transfected with wild-type TSC-22 exhibited reduced growth rates and increased levels of p21 compared with vector-transfected cells. Furthermore, transfection with a dominant negative TSC-22 in which both repressor domains were deleted was able to reverse the p21 induction and growth inhibition caused by activation of either the PPARgamma or TGF-beta pathways. These results place TSC-22 as an important downstream component of PPARgamma and TGF-beta signaling during intestinal epithelial cell differentiation.