Pulmonary fibrosis is characterized by the accumulation of fibroblasts, myofibroblasts, collagen, and other extracellular matrix proteins in the interstitium of the lung, with subsequent scarring and destruction of the alveolar capillary interface. In some cases, pulmonary fibrosis is preceded by lung inflammation and can be treated with anti-inflammatory therapies. However, idiopathic pulmonary fibrosis is characterized by a relative paucity of underlying inflammation and currently has no effective treatment. There is increasing evidence that the transcription factor peroxisome proliferator-activated receptor (PPAR) gamma plays an important role in controlling cell differentiation and that PPARgamma ligands can modify inflammatory and fibrotic responses. Peroxisome proliferator-activated receptor gamma ligands, including the thiazolidinedione class of antidiabetic drugs and novel triterpenoid compounds derived from oleanic acid, inhibit TGF-beta-stimulated profibrotic differentiation of lung fibroblasts in vitro and reduce lung scarring in animal models of fibrosis. The mechanism of action of the PPARgamma ligands is under investigation but seems to involve both PPARgamma-dependent and PPARgamma-independent pathways. These in vitro and in vivo data highlight the potentially exciting role of PPARgamma ligands as novel therapies for fibrosis of the lung and other organ systems prone to scarring. Many of the synthetic PPARgamma ligands are orally active, and several are currently available and Food Drug Administration approved for use in therapy of type 2 diabetes. Further research is urgently required to more clearly elucidate the mechanism of action of these drugs and to develop more potent antifibrotic agents for patients with scarring diseases for whom there are currently few effective therapies.