Peroxisomes in liver parenchymal cells proliferate in response to structurally diverse nonmutagenic compounds designated as peroxisome proliferators (PP). Sustained induction of peroxisome proliferation and peroxisomal fatty acid beta-oxidation system in rats and mice leads to the development of liver tumors. Two mechanistic issues are important for consideration: elucidation of the upstream events responsible for the tissue and species specific induction of the characteristic pleiotropic responses by PPs; and delineation of the downstream events associated with peroxisome proliferation, and their role in the development of liver tumors in species that are sensitive to the induction of peroxisome proliferation. The induction of peroxisome proliferation is mediated by PP-activated receptor alpha (PPAR alpha), a member of a group of transcription factors that regulate the expression of genes associated with lipid metabolism and adipocyte differentiation. Three isotypes of this family of nuclear receptors, namely PPAR alpha, PPAR gamma, and PPAR delta (also called beta), have been identified as products of separate genes. Although PPAR alpha is responsible for the PP-induced pleiotropic responses, PPAR gamma seems to be involved in adipogenesis and differentiation, but the events associated with PPAR gamma do not directly involve peroxisomes and peroxisome proliferation. PPARs heterodimerize with 9-cis retinoic acid receptor (RXR), and bind to PP response element(s) (PPREs) on the target gene promoter to initiate inducible transcriptional activity. Tissue and species responses to PPs depend on pharmacokinetics, relative abundance of PPAR isotypes, nature of PPRE in the upstream regions of target genes, the extent of competition or cross-talk among nuclear transcription factors for PPAR heterodimerization partner retinoid X receptor and the modulating role of coactivators and corepressors on ligand-dependent transcription of PPARs. Using PPAR as bait in the yeast two-hybrid system, the authors recently cloned mouse steroid receptor coactivator-1 (SRC-1) and PPAR-binding protein (PBP), and identified them as PPAR coactivators. Both SRC-1 and PBP contain LXXLL signature motifs, considered necessary and sufficient for the binding of coactivators to nuclear receptors. A multifaceted approach, which includes the identification of additional coactivators that may be responsible for cell specific transcriptional activation of PPAR-mediated target genes, and generation of genetically modified animals (transgenic and gene disrupted), will be necessary to gain more insight into the upstream and downstream targets responsible for the induction of early and delayed PP-induced pleiotropic responses. In this context, it is important to note that mice deficient in fatty acyl-CoA oxidase, the first and rate-limiting enzyme of the peroxisomal beta-oxidation system, revealed that this enzyme is indispensable for the physiological regulation of PPAR alpha, and the absence of this enzyme leads to sustained transcriptional activation of genes regulated by this receptor.