Thiazolidinediones have been reported to retard cystic disease in rodent models by uncertain mechanisms. We hypothesized that their major effect in retarding cystogenesis was through inhibiting cell proliferation or stimulating apoptosis. In the Madin-Darby canine kidney cell (MDCK) model, rosiglitazone inhibited cyst growth in a time- and dose-dependent manner and this was accompanied by a reduction in basal proliferation and an increase in apoptosis. Unexpectedly, we also observed a striking abnormality in lumen formation resulting in a characteristic multiple lumen or loss of lumen phenotype in treated cells at doses which did not inhibit cell proliferation. These changes were preceded by mislocalization of gp135 and Cdc42, misorientation of the mitotic spindle, and retardation in centrosome reorientation with later changes in primary cilia length and mislocalization of E-cadherin. Cdc42 activation was unaffected by rosiglitazone in monolayer culture but was profoundly inhibited in three-dimensional culture. MDCK cells stably expressing mutant Cdc42 showed a similar mislocalization of gp135 expression and multilumen phenotype in the absence of rosiglitazone. We conclude that rosiglitazone influences MDCK cyst growth by multiple mechanisms involving dosage-dependent effects on proliferation, spindle orientation, centrosome migration, and lumen formation. Correct spatial Cdc42 activation is critical for lumen formation, but the effect of rosiglitazone is likely to involve both Cdc42 and non-Cdc42 pathways.