Macrophages have important roles in both lipid metabolism and inflammation and are central to immunity to intracellular pathogens. Foam-like, lipid-laden macrophages are present during the course of mycobacterial infection and have recently been implicated in mycobacterial pathogenesis. In this study, we analyzed the molecular mechanisms underlying the formation of macrophage lipid bodies (lipid droplets) during Mycobacterium bovis bacillus Calmette-Guérin (BCG) infection, focusing on the role of the lipid-activated nuclear receptor peroxisome proliferator-activated receptor gamma (PPARgamma). We found that BCG infection induced increased expression of PPARgamma that paralleled the augmented lipid body formation and PGE(2) synthesis in mouse peritoneal macrophages. BCG-induced PPARgamma expression and lipid body formation were diminished in macrophages from TLR2-deficient mice, suggesting a key role for TLR2. The function of PPARgamma in modulating BCG infection was demonstrated by the capacity of the PPARgamma agonist BRL49653 to potentiate lipid body formation and PGE(2) production; furthermore, pretreatment with the PPARgamma antagonist GW9662 inhibited BCG-induced lipid body formation and PGE(2) production. BCG-induced MIP-1alpha, IL12p70, TNF-alpha, and IL6 production was not inhibited by GW9662 treatment. Nonpathogenic Mycobacterium smegmatis failed to induce PPARgamma expression or lipid body formation. Moreover, inhibition of PPARgamma by GW9662 enhanced the mycobacterial killing capacity of macrophages. Our findings show that PPARgamma is involved in lipid body biogenesis, unravels a cross-talk between the innate immune receptor TLR2 and the lipid-activated nuclear receptor PPARgamma that coordinates lipid metabolism and inflammation in BCG-infected macrophages, thereby potentially affecting mycobacterial pathogenesis.