Peroxisome proliferator-activated receptor-γ (PPARγ) agonists, a new class of antidiabetic agents, have been shown to possess antiinflammatory activity. In this study, we investigated the molecular mechanism by which PPARγ agonists inhibit proinflammatory cytokine expression in rat glomerular mesangial cells. Both natural and synthetic PPARγ agonists potently inhibited RANTES (regulated upon activation, normal T cell expressed and secreted) and monocyte chemoattractant protein-1 expression induced by TNF-α in mesangial cells, which was dependent on NF-κB signaling. However, PPARγ agonists had little effect on TNF-α-triggered IκBα phosphorylation and its subsequent degradation, p65 phosphorylation, and nuclear translocation. In the absence of PPARγ ligand, TNF-α induced a physical interaction between nuclear p65 and PPARγ, as demonstrated by co-immunoprecipitation. Such an interaction was mediated by the C-terminal region of p65. Activation of PPARγ by its agonist prevented PPARγ·p65 complex formation. Chromatin immunoprecipitation assay revealed that TNF-α induced p65 binding to the cis-acting κB elements in rat RANTES promoter, whereas disruption of PPARγ·p65 by its agonist blocked p65 interaction with its cognate κB sites. Knockdown of PPARγ via siRNA strategy completely abolished TNF-α-mediated p65 binding to κB sites and negated RANTES induction, suggesting that unliganded PPARγ is obligatory for NF-κB signaling. Consistently, overexpression of PPARγ in the absence of its ligand sensitized mesangial cells to TNF-α stimulation. These results uncover a paradoxical action of the unliganded and ligand-activated PPARγ in regulating NF-κB signaling and demonstrate PPARγ ligand as a molecular switch that controls its ability to modulate inflammatory responses in opposite directions.