Peroxisome proliferator-activated receptor-γ (PPAR-γ) is critical for phenotype determination at early differentiation stages of mesenchymal cells. Activation of this nuclear receptor inhibits gene expression in part by antagonizing the activities of several transcription factors. In this study we examined inhibitory mechanisms of osteoblast differentiation markers by activating PPAR-γ. Our data indicate that the PPAR-γ natural ligand 15d-PGJ2 dose-dependently inhibits expression of alkaline phosphatase and mineral deposition by primary stromal cells and by cell lines such as ST2 and MC3T3-E1. We next show that PPAR-γ nuclear translocation coincides with duration and doses of ligand addition, indicating that 15d-PGJ2-activated PPAR-γ rapidly translocates to the nuclear component where it exerts its biological effects. Further examination of downstream osteogenic signaling pathways induced by β-glycerophosphate and ascorbic acid reveals that induction of osteoblast differentiation by these agents involves activation of the transcription factors Cbfal and NF-κB. The former is critical for osteoblast differentiation. To test whether inhibition of alkaline phosphatase expression and mineral deposition by activated PPAR-γ reflects attenuation of transcriptional activity, we performed DNA protein-binding assays for NF-κB and Cbfa1. Our findings indicate that 15d-PGJ2-induced PPAR-γ abrogates β-glycerophosphate-activated Cbfa1 and NF-κB. These findings were consistent in primary and stromal cell lines, ST2 and MC3T3-E1. Thus activation of PPAR-γ by 15d-PGJ2 inhibits DNA-binding activity of the transcription factors Cbfa1 and NF-κB, leading to diminished expression of osteoblast/stromal differentiation markers.