Peroxisome proliferator-activated receptor-gamma (PPARgamma) is expressed in the intestinal epithelium, yet little is known about the physiological role of PPARgamma in the small bowel or the effects of PPARgamma on small intestinal epithelial cells. The present studies investigate cellular and genomic effects of PPARgamma in nontransformed rat intestinal epithelial cells (RIE). These cells were engineered to express mouse PPARgamma1, and thereby to model the molecular phenotype that obtains upon induction of PPARgamma at the crypt/villus junction in the small intestine. In these studies, we have used a novel third generation thiazolidinedione derivative, RS5444, which activates PPARgamma with an EC50 about 1/50th that of rosiglitazone and has no effect on RIE cells that do not express PPARgamma. We used Affymetrix oligonucleotide microarrays to identify potential PPARgamma-regulated processes in RIE cells, including lipid metabolism, cell proliferation and differentiation, remodeling of the extracellular matrix, cell morphology, cell-cell adhesion, and motility. The genomic profile reflects cellular events that occur following PPARgamma activation: RS5444 inhibited culture growth and caused irreversible G1 arrest, but did not induce apoptosis. In addition, RS5444 caused dramatic changes in cellular morphology which were associated with increased motility and diminished cellular adherence, but no increase in the ability of such cells to digest and invade Matrigel. Inhibition of proliferation, cell cycle arrest, increased motility, and altered adherence are aspects of the differentiated phenotype of villus epithelial cells, which withdraw from the cell cycle at the crypt/villus interface, migrate to the villus tips, and are subsequently shed by loss of contact with the epithelium and the underlying extracellular matrix. Our results are consistent with the hypothesis that PPARgamma regulates critical aspects of differentiation in the small intestinal epithelium. Many nuclear receptors regulate differentiation. However, our results point to novel effects of PPARgamma on cell-cell and cell-matrix interactions, which are not typical of other nuclear receptors.