The immediate response to skin injury is the release of inflammatory signals. It is shown here, by use of cultures of primary keratinocytes from wild-type and PPAR beta/delta(-/-) mice, that such signals including TNF-alpha and IFN-gamma, induce keratinocyte differentiation. This cytokine-dependent cell differentiation pathway requires up-regulation of the PPAR beta/delta gene via the stress-associated kinase cascade, which targets an AP-1 site in the PPAR beta/delta promoter. In addition, the pro-inflammatory cytokines also initiate the production of endogenous PPAR beta/delta ligands, which are essential for PPAR beta/delta activation and action. Activated PPAR beta/delta regulates the expression of genes associated with apoptosis resulting in an increased resistance of cultured keratinocytes to cell death. This effect is also observed in vivo during wound healing after an injury, as shown in dorsal skin of PPAR beta/delta(+/+) and PPAR beta/delta(+/-) mice.