Differentiation of CD4+ T cells into effector or regulatory phenotypes is tightly controlled by the cytokine milieu, complex intracellular signaling networks and numerous transcriptional regulators. We combined experimental approaches and computational modeling to investigate the mechanisms controlling differentiation and plasticity of CD4+ T cells in the gut of mice. Our computational model encompasses the major intracellular pathways involved in CD4+ T cell differentiation into T helper 1 (Th1), Th2, Th17 and induced regulatory T cells (iTreg). Our modeling efforts predicted a critical role for peroxisome proliferator-activated receptor gamma (PPARγ) in modulating plasticity between Th17 and iTreg cells. PPARγ regulates differentiation, activation and cytokine production, thereby controlling the induction of effector and regulatory responses, and is a promising therapeutic target for dysregulated immune responses and inflammation. Our modeling efforts predict that following PPARγ activation, Th17 cells undergo phenotype switch and become iTreg cells. This prediction was validated by results of adoptive transfer studies showing an increase of colonic iTreg and a decrease of Th17 cells in the gut mucosa of mice with colitis following pharmacological activation of PPARγ. Deletion of PPARγ in CD4+ T cells impaired mucosal iTreg and enhanced colitogenic Th17 responses in mice with CD4+ T cell-induced colitis. Thus, for the first time we provide novel molecular evidence in vivo demonstrating that PPARγ in addition to regulating CD4+ T cell differentiation also plays a major role controlling Th17 and iTreg plasticity in the gut mucosa.