Peroxisome proliferator-activated receptor (PPAR) gamma activation has been implicated in the prevention of immunoinflammatory disorders; however, the mechanisms of regulation of effector and regulatory CD4+ T cell functions by endogenously activated PPAR-gamma remain unclear. We have used PPAR-gamma-deficient CD4+ T cells obtained from tissue-specific PPAR-gamma null mice (i.e., PPAR-gamma fl/fl; MMTV-Cre+) to investigate the role of endogenous PPAR-gamma on regulatory T cell (Treg) and effector CD4+ T cell function. Overall, we show that the loss of PPAR-gamma results in enhanced Ag-specific proliferation and overproduction of IFN-gamma in response to IL-12. These findings correlate in vivo with enhanced susceptibility of tissue-specific PPAR-gamma null mice to trinitrobenzene sulfonic acid-induced colitis. Furthermore, the transfer of purified PPAR-gamma null CD4+ T cells into SCID recipients results in enteric disease. To test the assertion that the deficiency of PPAR-gamma in Treg impairs their ability to prevent effector T cell-induced colitis, we performed cotransfer studies. These studies demonstrate that PPAR-gamma-expressing, but not PPAR-gamma null Treg, prevent colitis induced by transfer of naive CD4+ T cells into SCID recipients. In line with these findings, the production of IFN-gamma by spleen and mesenteric lymph node-derived CD4+ T cells was down-regulated following transfer of PPAR-gamma-expressing, but not PPAR-gamma null, Treg. In conclusion, our data suggest that endogenous PPAR-gamma activation represents a Treg intrinsic mechanism of down-regulation of effector CD4+ T cell function and prevention of colitis.