The caudal-associated homeobox transcription factor, CDX1, performs critical functions in intestinal cell proliferation, differentiation, and neoplasia. In this study, we have identified the molecular mechanism underlying the CDX1-mediated regulation of intestinal cell differentiation. CDX1 enhanced the expression of PPARgamma gene, a master transcriptional regulator of intestinal differentiation, at the transcriptional level, via functional interaction with CCAAT/enhancer-binding protein alpha (C/EBPalpha). Butyrate, an intestinal differentiation inducer, increased the protein interaction of CDX1 and C/EBPalpha, thereby resulting in a significant increase in PPARgamma expression. These results show that the regulation of target gene expression for intestinal determination is dependent on a transcriptional cascade of CDX1, C/EBPalpha, and PPARgamma.