We investigated the effects of anandamide on peroxisome proliferator-activated receptor gamma (PPARgamma) activity. In two different transactivation systems using either full-length or only the ligand binding domain of PPARgamma, we showed that anandamide, but not palmitoylethanolamide induced transcriptional activation of PPARgamma in a dose dependent manner with an EC50 of 8 microM. In addition, competition binding experiments showed that anandamide but not palmitoylethanolamide binds directly to PPAR-ligand binding domain. We also found that anandamide treatment induced 3T3-L1 fibroblast differentiation into adipocytes. Indeed, anandamide induced triglyceride droplet accumulation and the expression of PPARgamma responsive genes such as CCAAT enhancer binding protein alpha (C-EBPalpha), aP2, PerilipinA and Acrp30. Furthermore, the PPARgamma antagonist (GW9662) inhibited the anandamide-induced 3T3-L1 differentiation confirming that this is a PPARgamma-mediated process. Altogether, these data indicate that anandamide binds PPARgamma and induces cellular PPARgamma signaling.