Recent studies indicate that a peroxisome proliferator-activated receptor, PPAR gamma, functions as an important adipocyte determination factor. In contrast, tumor necrosis factor-alpha (TNF alpha) inhibits adipogenesis, causes dedifferentiation of mature adipocytes, and reduces the expression of several adipocyte-specific genes. Here, we report that treatment of 3T3-L1 adipocytes with TNF alpha resulted in a time- and concentration-dependent decrease in PPAR gamma mRNA expression to the level detected in preadipocytes. PPAR gamma mRNA levels were reduced by 95% with 3 nM TNF alpha treatment for 24 h. Half-maximal effects were seen after 3 h treatment with 3 nM TNF alpha or with 50 pM TNF alpha (24-h exposure). Parallel reductions in PPAR gamma protein levels were also observed after treatment of 3T3-L1 adipocytes with TNF alpha. Using a ribonuclease protection assay, both alternatively spliced PPAR gamma isoforms (gamma 1 and gamma 2) were shown to be negatively regulated by TNF alpha. The down-regulation of PPAR gamma by TNF-alpha preceded the diminution in expression of other adipocyte-specific genes including CCAAT/enhancer binding protein and adipocyte fatty acid-binding protein (aP2). The effect of TNF alpha was specific for the gamma-isoform of PPARs, since the expression of PPAR delta mRNA was not affected by treatment with TNF alpha. Low level constitutive expression of PPAR gamma in 3T3-L1 adipocytes (at levels approximately 2- to 3-fold higher than in preadipocytes) partially blocked the inhibitory effect of TNF alpha on aP2 and adipsin expression. These findings support the following conclusions: 1) PPAR gamma expression is necessary for the maintenance of the adipocyte phenotype. 2) PPAR gamma, but not PPAR delta, expression is sufficient to attenuate TNF alpha-mediated effects on adipocyte phenotype. 3) Reduced PPAR gamma gene expression is likely to represent an important component of the mechanism by which TNF alpha exerts its antiadipogenic effects.