Aromatic fatty acids, of which phenylacetate is a prototype, constitute a class of low toxicity drugs with demonstrated antitumor activity in experimental models and in humans. Using in vitro models, we show here a tight correlation between tumor growth arrest by phenylacetate and activation of peroxisome proliferator-activated receptor gamma (PPARgamma), a member of the nuclear receptor superfamily. In support are the following observations: (a) the efficacy of phenylacetate as a cytostatic agent was correlated with pre-treatment levels of PPARgamma, as documented using established tumor lines and forced expression models; (b) in responsive tumor cells, PPARgamma expression was up-regulated within 2-9 h of treatment preceding increases in p21waf1, a marker of cell cycle arrest; (c) inhibition of mitogen-activated protein kinase, a negative regulator of PPARgamma, enhanced drug activity; and (d) phenylacetate interacted directly with the ligand-binding site of PPARgamma and activated its transcriptional function. The ability to bind and activate PPARgamma was common to biologically active analogues of phenylacetate and corresponded to their potency as antitumor agents (phenylacetate < phenylbutyrate < p-chloro-phenylacetate < p-iodo-phenylbutyrate), whereas an inactive derivative, phenylacetylglutamine, had no effect on PPARgamma. These findings point to PPARgamma as a novel target in cancer therapy and provide the first identification of ligands that have selective antitumor activity in patients.