Although peroxisome proliferator‐activated receptor gamma (PPARγ) agonist have been shown to inhibit hepatocellular carcinoma (HCC) development, the role of PPARγ in hepatocarcinogenesis remains unclear. We investigated the therapeutic efficacy of PPARγ against HCC. PPARγ‐deficient (PPARγ^+/−) and wild‐type (PPARγ^+/+) littermates were used in a diethylnitrosamine (DEN)‐induced HCC model and treated with PPARγ agonist (rosiglitazone) or the vehicle alone for 8 months. The effects of PPARγ on HCC cell growth and apoptosis were examined using PPARγ‐expressing adenovirus (Ad‐PPARγ). PPARγ^+/− mice were more susceptible to DEN‐induced HCC than PPARγ^+/+ mice (94% versus 62%, P < 0.05), and rosiglitazone significantly reduced the incidence of HCC in PPARγ^+/+ mice (vehicle 62% versus treatment 24%, P < 0.01), but not in PPARγ^+/− mice, indicating that PPARγ suppresses hepatocellular carcinogenesis. A pronounced expression of PPARγ was observed in a HCC cell line (Hep3B) infected with Ad‐PPARγ. Such induction markedly suppressed HCC cell viability (P < 0.01). Further, Hep3B infection with Ad‐PPARγ revealed a decreased proportion of cells in S‐phase (12.92% versus 11.58%, P < 0.05), with arrest at G₂/M phase (38.2% versus 55.68%, P < 0.001), and there was concomitant phosphorylation of the key G₂/M phase inhibitors cdc25C and cdc2. PPARγ overexpression increased cell apoptosis (21.47% versus 35.02%, P < 0.01), mediated by both extrinsic (Fas and tumor necrosis factor‐α) and intrinsic (caspase‐9, caspase‐3, caspase‐7, and poly[ADP‐ribose] polymerase) pathways. Moreover, PPARγ directly induced a putative tumor suppressor gene, growth differentiation factor‐15. Conclusion: Loss of one PPARγ allele is sufficient to enhance susceptibility to HCC. PPARγ suppresses tumor cell growth through reducing cell proliferation and inducing G₂/M phase arrest, apoptosis, and up‐regulating growth differentiation factor‐15. Thus, PPARγ acts as a tumor‐suppressor gene in the liver. HEPATOLOGY 2010