Fatty acid-binding protein 1 (FABP1) is an intracellular protein responsible for the transportation of long chain fatty acids. Aside from its functions in lipid metabolism and cellular differentiation, FABP1 also plays a role in inflammation through its interaction with peroxisome proliferator-activated receptors (PPARs). Previously, we compared expression of colonic epithelium genes in a subset of microsatellite instable (MSI) colorectal carcinomas (medullary carcinomas) to normal colonic mucosa and found that FABP1 expression was markedly decreased in the tumors. Further analysis of RNA expression in the colorectal subtypes and The Cancer Genome Atlas data set found that FABP1 expression is decreased in the CMS1 subset of colorectal carcinomas, which is characterized by microsatellite instability. As MSI colorectal carcinomas are known for their robust immune response, we then aimed to link FABP1 to the immune microenvironment of MSI carcinomas. To confirm the gene expression results, we performed immunohistochemical analysis of a cohort of colorectal carcinomas. FABP1 was preferentially lost in MSI carcinomas (123/133, 93%) compared with microsatellite stable carcinomas (240/562, 43%, P<0.0001). In addition, higher numbers of tumor-infiltrating lymphocytes were present in tumors with loss of FABP1 (P<0.0001). Decreased expression of the fatty acid storage and glucose regulator, PPARγ, was associated with the loss of FABP1 (P<0.0001). Colorectal cancer cell lines treated with interferon γ exhibited decreased expression of FABP1. FABP1 expression was partially recovered with the treatment of the cell lines with rosiglitazone, a PPARγ agonist. This study demonstrated that the loss of FABP1 expression is associated with MSI carcinomas and that interferon γ stimulation plays a role in this process via its interaction with PPARγ.