Recently, a translocation t(2; 3)(q13;p25), involving the fusion of PAX8 and peroxisome proliferator-activated receptor gamma (PPAR gamma) was suggested to arise only in follicular thyroid carcinomas. In this study, a group of 87 thyroid tumors were analyzed to determine the involvement of the PAX8/PPAR gamma fusion gene in these tumors, and also to determine whether this rearrangement can be used as a diagnostic marker for the differentiation between follicular thyroid carcinoma and adenoma. The PAX8/PPAR gamma rearrangement was detected by RT-PCR, fluorescence in situ hybridization, and/or Western analysis in 10 of 34 (29%) follicular thyroid carcinomas and in one of 20 (5%) atypical follicular thyroid adenomas, but not in any of the 20 follicular thyroid adenomas or 13 anaplastic thyroid carcinomas studied. In addition, seven of the 87 thyroid tumors exhibited involvement of PPAR gamma alone. Our findings suggest that PAX8/PPAR gamma occurs frequently in follicular thyroid carcinomas, and the presence of this rearrangement is likely to prove highly suggestive of a malignant tumor. Lack of the PAX8/PPAR gamma rearrangement in the anaplastic thyroid carcinoma group suggests that the tumorigenic pathway in these tumors is likely to be independent of this fusion. Furthermore, the results suggest that other rearrangements, involving PPAR gamma and other unidentified genes, may be involved in follicular thyroid tumorigenesis.