Peroxisome proliferator-activated receptor gamma (PPARgamma) is a ligand dependent transcriptional factor known to be a regulator of adipogenesis. Recent studies have also shown that stimulation of PPARgamma inhibits the transcriptional activities of other nuclear factors and down-regulates proinflammatory cytokine synthesis in T cells and monocytes. We examined, in the present study, the functional significance of PPARgamma expressed in fibroblast-like synovial cells (FLS) isolated from patients with rheumatoid arthritis (RA). Incubation of FLS with a synthetic PPARgamma ligand, troglitazone, inhibited endogenous production of TNF-alpha, IL-6 and IL-8, as well as matrix metalloprotease-3 (MMP-3), without inducing apoptosis of the cells. The gelatinase activity of FLS culture media was also inhibited by troglitazone. Electrophoretic mobility shift assay (EMSA) showed a significant reduction in the DNA binding activity of NF-kappaB in troglitazone-treated FLS in response to TNF-alpha or IL-1beta. Moreover, long-term cultivation of FLS with troglitazone resulted in morphological changes with marked lipid accumulation in these cells. Our results show a negative regulatory function for PPARgamma on cytokine and MMP production together with inhibition of cytokine-mediated inflammatory responses in rheumatoid synovial cells. Our results also suggest that FLS could differentiate into adipocyte-like cells in the presence of proper stimulatory signals including PPARgamma.