Peroxisome proliferator-activated receptor-gamma (PPAR-gamma) ligands inhibit the growth of PPAR-gamma expressing cancer cells through terminal differentiation. However, there are few studies examining the effect of a PPAR-gamma ligand on metastatic potential of cancer cells in an animal model and the underlying molecular mechanisms. We have recently developed a rectal cancer xenograft animal model in which anti-tumor and anti-metastatic efficacy of agents can be evaluated. This study was designed to examine whether a representative PPAR-gamma ligand, thiazolidinedione (TZD), could inhibit growth and metastasis of PPAR-gamma positive HT-29 human colon cancer cells through the induction of terminal differentiation. TZD caused G1 arrest in association with a marked increase in p21Waf-1, Drg-1, and E-cadherin expression. In untreated cancer cells, fluorescence immunostaining demonstrated beta-catenin in the nucleus and/or cytoplasm; in TZD-treated cancer cells, beta-catenin localization shifted to the plasma membrane, in association with increased E-cadherin at this site and reduced tyrosine phosphorylation of beta-catenin. In addition, TZD completely inhibited lymph node and lung metastases in the xenograft animal model, and TZD inhibited growth of primary xenografts by 40%. These results suggest that TZD can function as a cytostatic anti-cancer agent to inhibit growth and metastasis of HT-29 colon cancer cells through differentiation-promoting effects. These effects involve not only modulation of the E-cadherin/beta-catenin system, but also up-regulation of Drg-1 gene expression.