The nuclear orphan receptor peroxisome proliferator-activated receptor-gamma (PPAR-γ) is expressed in multiple cell types in addition to adipocytes. Upon its activation by natural ligands such as fatty acids and eicosanoids, or by synthetic agonists such as rosiglitazone, PPAR-γ regulates adipogenesis, glucose uptake and inflammatory responses. Recent studies establish a novel role for PPAR-γ signaling as an endogenous mechanism for regulating transforming growth factor-ß (TGF-ß)-dependent fibrogenesis. Here, we sought to characterize PPAR-γ function in the prototypic fibrosing disorder systemic sclerosis (SSc), and delineate the factors governing PPAR-γ expression. We report that PPAR-γ levels were markedly diminished in skin and lung biopsies from patients with SSc, and in fibroblasts explanted from the lesional skin. In normal fibroblasts, treatment with TGF-ß resulted in a time- and dose-dependent down-regulation of PPAR-γ expression. Inhibition occurred at the transcriptional level and was mediated via canonical Smad signal transduction. Genome-wide expression profiling of SSc skin biopsies revealed a marked attenuation of PPAR-γ levels and transcriptional activity in a subset of patients with diffuse cutaneous SSc, which was correlated with the presence of a "TGF-ß responsive gene signature" in these biopsies. Together, these results demonstrate that the expression and function of PPAR-γ are impaired in SSc, and reveal the existence of a reciprocal inhibitory cross-talk between TGF-ß activation and PPAR-γ signaling in the context of fibrogenesis. In light of the potent anti-fibrotic effects attributed to PPAR-γ, these observations lead us to propose that excessive TGF-ß activity in SSc accounts for impaired PPAR-γ function, which in turn contributes to unchecked fibroblast activation and progressive fibrosis.