Chronic inflammation and fibrosis are the leading causes of chronic allograft failure. The nuclear receptor peroxisome proliferator-activated receptor (PPAR)gamma is a transcription factor known to have antidiabetogenic and immune effects, and PPARgamma forms obligate heterodimers with the retinoid X receptor (RXR). We have reported that a retinoic acid (RAR)/RXR-agonist can potently influence the course of renal chronic allograft dysfunction. In this study, in a Fischer to Lewis rat renal transplantation model, administration of the PPARgamma-agonist, rosiglitazone, independent of dose (3 or 30 mg/kgBW/day), lowered serum creatinine, albuminuria, and chronic allograft damage with a chronic vascular damage score as follows: 35.0 +/- 5.8 (controls) vs. 8.1 +/- 2.4 (low dose-Rosi; P < 0.05); chronic tubulointerstitial damage score: 13.6 +/- 1.8 (controls) vs. 2.6 +/- 0.4 (low dose-Rosi; P < 0.01). The deposition of extracellular matrix proteins (collagen, fibronectin, decorin) was strikingly lower. The expression of transforming growth factor-beta1 was inhibited, whereas that of bone morphogenic protein-7 (BMP-7) was increased. Intragraft mononuclear cells and activated fibroblast numbers were reduced by 50%. In addition, the migratory and proliferative activity of these cells was significantly inhibited in vitro. PPARgamma activation diminished the number of cells expressing the proinflammatory and fibrogenic proteoglycan biglycan. In macrophages its secretion was blocked by rosiglitazone in a predominantly PPARgamma-dependent manner. The combination of PPARgamma- and RAR/RXR-agonists resulted in additive effects in the inhibition of fibrosis. In summary, PPARgamma activation was potently immunosuppressive and antifibrotic in kidney allografts, and these effects were enhanced by a RAR/RXR-agonist.