Vascular endothelial growth factor receptor 2 (KDR) plays a critical role in mediating a variety of vasculogenic and angiogenic processes, including diabetic retinopathy. We previously demonstrated that the promoter activity of the KDR gene in retinal capillary endothelial cells (RCECs) was regulated in part by the relative concentration of positive/negative transcription factors Sp1/Sp3. We also reported that the peroxisome proliferator-activated receptor (PPAR)gamma ligand could inhibit intraocular angiogenesis. In the present study, the role of PPARgamma1 in KDR gene regulation in RCECs was examined. PPARgamma1 protein physically interacted with both Sp1 and Sp3. Transactivation and electrophoretic mobility shift assays clearly demonstrated novel findings that PPARgamma1 increased KDR promoter activity by enhancing the interaction between Sp1, but not Sp3, and KDR promoter region without its ligand in RCECs. The ligand-binding site but not the DNA binding site of PPARgamma1 enhanced the interaction between Sp1 and KDR promoter region. Conversely, PPARgamma1 ligand 15-deoxy Delta (12,14)-prostaglandin J2 dose-dependently suppressed the binding of KDR promoter region with both Sp1 and Sp3, resulting an inhibition of KDR gene expression. In conclusion, PPARgamma1 has bifunctional properties in the regulation of KDR gene expression mediated via interaction with both Sp1 and Sp3.