Epidemiological evidence suggests that nonsteroidal anti-inflammatory drugs (NSAIDs) decrease the risk for Alzheimer's disease (AD). Certain NSAIDs can activate the peroxisome proliferatoractivated receptor-␥ (PPAR␥), which is a nuclear transcriptional regulator. Here we show that PPAR␥ depletion potentiates -secretase [-site amyloid precursor protein cleaving enzyme (BACE1)] mRNA levels by increasing BACE1 gene promoter activity. Conversely, overexpression of PPAR␥, as well as NSAIDs and PPAR␥ activators, reduced BACE1 gene promoter activity. These results suggested that PPAR␥ could be a repressor of BACE1. We then identified a PPAR␥ responsive element (PPRE) in the BACE1 gene promoter. Mutagenesis of the PPRE abolished the binding of PPAR␥ to the PPRE and increased BACE1 gene promoter activity. Furthermore, proinflammatory cytokines decreased PPAR␥ gene transcription, and this effect was supressed by NSAIDs. We also demonstrate that in vivo treatment with PPAR␥ agonists increased PPAR␥ and reduced BACE1 mRNA and intracellular -amyloid levels. Interestingly, brain extracts from AD patients showed decreased PPAR␥ expression and binding to PPRE in the BACE1 gene promoter. Our data strongly support a major role of PPAR␥ in the modulation of amyloid- generation by inflammation and suggest that the protective mechanism of NSAIDs in AD involves activation of PPAR␥ and decreased BACE1 gene transcription.amyloid ͉ inflammation ͉ Alzheimer's disease ͉ transgenic mice