Peroxisome proliferator activated receptors (PPAR) belong to the superfamily of nuclear hormone receptors that heterodimerize with the retinoid X receptor and regulate transcription of several genes involved in lipid metabolism and adipocyte differentiation. Because of the role of 1,25-dihydroxyvitamin D3 and retinoic acid working through similar receptors (the vitamin D receptor and retinoic acid receptor, respectively) on keratinocyte differentiation, we have examined the effects of activators of PPARalpha on keratinocyte differentiation. The rate of cornified envelope formation was increased 3-fold in keratinocytes maintained in low calcium (0.03 mM) and incubated in the presence of clofibric acid, a potent PPARalpha activator. Involucrin, a cornified envelope precursor, and the cross-linking enzyme transglutaminase, were increased at both the message level (2-7-fold) and the protein level (4-12-fold) by clofibric acid. Furthermore, physiologic doses of the fatty acids oleic acid, linoleic acid, and eicosatetraynoic acid, which are also activators of PPARalpha, also induced involucrin and transglutaminase protein and mRNA. In contrast, the PPARgammaligand prostaglandin J2 had no effect on protein or mRNA levels of involucrin or transglutaminase. Levels of involucrin and transglutaminase mRNA and protein were induced by clofibric acid in keratinocytes incubated in 1.2 mM calcium, a concentration which by itself induces keratinocyte differentiation. Finally, PPARalpha activators inhibit DNA synthesis. This study demonstrates that PPARalpha activators, including putative endogenous ligands such as fatty acids, induce differentiation and inhibit proliferation in keratinocytes, and suggests a regulatory role for the PPARalpha in epidermal homeostasis.