Little is known of the transcriptional events controlling the differentiation and function of dendritic cells (DC). We found that the ligand-activated transcription factor Peroxisome Proliferator Activated Receptor gamma (PPARgamma) is immediately upregulated after the induction of monocyte-derived DC differentiation. Activation of PPARgamma changed the expression pattern of cell surface receptors and enhanced the internalizing activity of DC. Unexpectedly, we found that CD1 glycoproteins, a class of molecules responsible for the presentation of self and foreign modified lipids, were coordinately regulated by PPARgamma activation. CD1a levels were reduced, while CD1d expression was induced. Enhanced expression of CD1d was coupled to the selective induction of invariant natural-killer T cell (iNKT cell) proliferation in the presence of alpha-GalCer. These results suggest that PPARgamma orchestrates a transcriptional response leading to the development of a DC subtype with increased internalizing capacity, efficient lipid presentation, and the augmented potential to activate iNKT cells.