NR0B1, an orphan nuclear receptor, is expressed in side population cells and its knockdown reduces tumorigenic and anti-apoptotic potential in lung adenocarcinoma. Peroxisome proliferator-activated receptor γ (PPARγ) is another member of the nuclear receptor family which induces apoptosis in lung cancer. The interaction of NR0B1 with PPARγ was examined. The transactivation ability of PPARγ was inhibited by NR0B1 in lung adenocarcinoma, and the N-terminal region of NR0B1 containing LxxLL motifs mediated its inhibition. Co-immunoprecipitation experiments revealed that this N-terminal region of NR0B1 was essential for the physical interaction with PPARγ. Aldehyde dehydrogenase (ALDH) activity and ALDH3A1 expression, which are correlated with tumorigenic potential of lung adenocarcinoma, increased when NR0B1 expression was induced, but its increase was inhibited by PPARγ overexpression. ALDH activity increased by treatment with PPARγ inhibitor, and the increase was further enhanced when the expression of NR0B1 was induced. Furthermore, the high NR0B1 and low PPARγ expression was a negative prognostic factor in Pathological-Stage IA clinical cases. These results indicate the reciprocal relationship between NR0B1 and PPARγ on the malignant grade of lung adenocarcinoma.