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Peroxisome proliferator-activated receptor-gamma (PPAR-gamma) agonists, such as the thiazolidinediones (TZDs), decrease acute inflammation in both pancreatic cell lines and mouse models of acute pancreatitis. Since PPAR-gamma agonists have been shown to exert some of their actions independent of PPAR-gamma, the role of PPAR-gamma in pancreatic inflammation has not been directly tested. Furthermore, the differential role of PPAR-gamma in endodermal derivatives (acini, ductal cells, and islets) as opposed to the endothelial or inflammatory cells is unknown. To determine whether the effects of a TZD, rosiglitazone, on caerulein-induced acute pancreatitis are dependent on PPAR-gamma in the endodermal derivatives, we created a cell-type specific knock out of PPAR-gamma in pancreatic acini, ducts, and islets. PPAR-gamma knockout animals show a greater response in some inflammatory genes after caerulein challenge. The anti-inflammatory effect of rosiglitazone on edema, macrophage infiltration, and expression of the proinflammatory cytokines is significantly decreased in pancreata of the knockout animals compared with control animals. However, rosiglitazone retains its effect in the lungs of the pancreatic-specific PPAR-gamma knockout animals, likely due to direct anti-inflammatory effect on lung parenchyma. These data show that the PPAR-gamma in the pancreatic epithelia and islets is important in suppressing inflammation and is required for the anti-inflammatory effects of TZDs in acute pancreatitis.