Induction of terminal differentiation of cancer cells is an evolving novel therapeutic approach, and accordingly, peroxisome proliferator-activated receptor gamma (PPARgamma), a ligand-stimulated transcription factor with differentiation-promoting activity and overexpressed in a variety of cancers, has emerged as one of the promising therapeutic targets. Because c-erbB family growth factor receptor 2 (HER2) overexpression is one of the most recognizable molecular dysfunctions in breast tumors, in the studies presented here, we explored the effect of HER2 overexpression on the status of PPARgamma expression and on the sensitivity of breast cancer cells to PPARgamma-ligand troglitazone-induced growth inhibition. We show that HER2 overexpression in MCF7 breast cancer cells enhanced the expression of PPARgamma-mRNA and -protein. Furthermore, PPARgamma expression was dramatically increased in 11 of 16 breast tumors as compared with the adjacent normal tissue. In addition, HER2 up-regulation resulted in a partial inhibition of transcriptional activity of the endogenous PPARgamma, stimulation to differentiation, and resistance to troglitazone-mediated inhibition of anchorage-independent growth of breast cancer cells. Conversely, down-regulation of HER2 by anti-HER2 monoclonal antibody Herceptin led to a decreased level of PPARgamma protein and sensitization of breast cancer cells to the inhibitory effects of troglitazone. In summary, these findings show for the first time that HER2 up-regulates PPARgamma expression and modulates the sensitivity of breast cancer cells to PPARgamma ligand therapy.