Short-term treatment of rats and mice with peroxisome proliferators (PP) results in an increase in liver peroxisome number, marked hepatomegaly and induction of several genes encoding peroxisomal and other microsomal and mitochondrial enzymes involved in fatty acid metabolism. Chronic treatment of rodents with PP results in hepatocellular carcinoma. Species differences in PP responses have been found. For example, PP such as clofibrate and gemfibrozil, are highly effective lipid and cholesterol lowering drugs in humans but do not cause peroxisome proliferation and there is no evidence for increased liver cancers in patients receiving these drugs. A receptor, designated PP-activated receptor alpha (PPAR alpha) is capable of trans-activating reporter genes containing a PP response (PPRE), but requires the presence of both PP, 9-cis retinoic acid and another receptor called RXR alpha. However, PP may not directly bind to PPAR alpha but probably indirectly disturb cellular metabolism to liberate an endogenous ligand. Subsequent to the first identification of a PPAR alpha, other members of this receptor family were found and designated PPAR alpha, PPAR beta (also called NUC1 and PPAR delta) and PPAR gamma. The alpha form is most abundant in liver and kidney, sites of peroxisome proliferation while the other two receptors are not significantly expressed in these tissues. On the basis of tissue-specific localization and spectrum of target gene activation, the physiological function of PPAR alpha and PPAR gamma appear to be related to fatty acid metabolism and regulation of adipogenesis, respectively. To gain insight into the function of PPAR alpha and its role in the peroxisome proliferator response and hepatocellular carcinogenesis, gene targeting was used to develop a PPAR alpha-deficient mouse. These animals are resistant to the pleiotropic effects of PP and no induction of any known target gene has been found. Recent studies on the phenotypes of these mice have led to an understanding of the mechanism of action of PP. They have also provided a useful model to establish the physiological role of PPAR alpha in fatty acid homeostasis and inflammation.