Peroxisome proliferator-activated receptor (PPAR) beta-null mice exhibit exacerbated epithelial cell proliferation and enhanced sensitivity to skin carcinogenesis, suggesting that ligand activation of PPARbeta will inhibit keratinocyte proliferation. By using of a highly specific ligand (GW0742) and the PPARbeta-null mouse model, activation of PPARbeta was found to selectively induce keratinocyte terminal differentiation and inhibit keratinocyte proliferation. Additionally, GW0742 was found to be anti-inflammatory due to inhibition of myeloperoxidase activity, independent of PPARbeta. These data suggest that ligand activation of PPARbeta could be a novel approach to selectively induce differentiation and inhibit cell proliferation, thus representing a new molecular target for the treatment of skin disorders resulting from altered cell proliferation such as psoriasis and cancer.