The urothelium is an epithelial barrier lining the bladder that protects against infection, fluid exchange and damage from toxins. The nuclear receptor Pparg promotes urothelial differentiation in vitro, and Pparg mutations are associated with bladder cancer. However, the function of Pparg in the healthy urothelium is unknown. Here we show that Pparg is critical in urothelial cells for mitochondrial biogenesis, cellular differentiation and regulation of inflammation in response to urinary tract infection (UTI). Superficial cells, which are critical for maintaining the urothelial barrier, fail to mature in Pparg mutants and basal cells undergo squamous-like differentiation. Pparg mutants display persistent inflammation after UTI, and Nf-KB, which is transiently activated in response to infection in the wild type urothelium, persists for months. Our observations suggest that in addition to its known roles in adipogegnesis and macrophage differentiation, that Pparg-dependent transcription plays a role in the urothelium controlling mitochondrial function development and regeneration.