Peroxisome proliferator-activated receptor-gamma (PPARgamma) is a nuclear receptor for eicosanoids that promotes differentiation of human epithelial and mesenchymal cells in vitro and in vivo. PPARgamma was proposed as a target for drug-induced differentiation therapy of cancer. Caveolin-1 is a constituent of plasma membrane caveolae in epithelial cells that is often downregulated upon oncogenic transformation. Caveolin-1 has growth-inhibitory activities and its disruption is sufficient to induce transformation in fibroblasts. Herein we have tested the hypothesis that caveolins are transcriptional target genes for PPARgamma. In human HT-29 colon carcinoma cells, thiazolidinedione PPARgamma ligands increased the levels of caveolin-1 and caveolin-2 proteins two to fivefold in a concentration-dependent manner within 24 h. In human MCF-7 breast adenocarcinoma cells, nonthiazolidinedione PPARgamma ligands elevated caveolin-2 protein three to fourfold, while the thiazoli-dinediones were less effective. Caveolin-1 mRNA levels were found to be upregulated by PPARgamma ligands already after 3 h in both the cell lines. Ectopic expression of a dominant-negative PPARgamma construct attenuated ligand-induced upregulation of caveolins in both HT-29 and HEK-293T cells, indicating that ligand action is mediated by PPARgamma. Ligand-treated MCF-7 cells exhibited a differentiated phenotype, as evinced by analysis of cell-specific differentiation markers: protein levels of maspin were elevated and perinuclear lipid droplets accumulated. In contrast, in HT-29 cells, caveolin expression was not correlated with differentiation. Interestingly, PPARgamma partially cofractionated in lipid rafts and could be coimmunoprecipitated from cell lysates with caveolin-1, indicating that PPARgamma and caveolin-1 may coexist in a complex. Our data indicate that PPARgamma participates in the regulation of caveolin gene expression in human carcinoma cells and suggest that caveolin-1 may mediate some of the phenotypic changes induced by this nuclear receptor in cancer cells. These findings may have potentially important functional implications in the context of cancer differentiation therapy and multidrug resistance.