Chronic inflammatory response and active vascular remodeling are two featured pathophysiological events during atherogenesis. Gamma interferon (IFN-gamma) modulates these two processes through transcriptional control of major histocompatibility complex II (MHC II) and collagen type I (COL1A2) genes, mediated by class II transactivator (CIITA). Transforming growth factor (TGF-beta) antagonizes the effect of IFN-gamma in part by dampening the expression of CIITA. Here we report that peroxisome proliferator activated receptor gamma (PPARgamma) enhanced MHC II activation and COL1A2 repression by IFN-gamma while rescuing the antagonism by TGF-beta in a CIITA-dependent manner in human aortic smooth muscle cells judged by quantitative PCR and luciferase reporter assays. PPARgamma exerted its effect by augmenting the levels of CIITA and stimulating CIITA recruitment to target promoters as evidenced by chromatin immunoprecipitation assays. The up-regulation of CIITA levels was the result of PPARgamma-mediated transcriptional activation of CIITA through promoter IV, and increased CIITA protein stability. Thus, our data suggest that PPARgamma could be a key factor in fine-tuning inflammation as well as restructuring of vessel walls during atherogenesis by acting as a "balance tipper" of the differential effects exerted by cytokines.