The progesterone receptor (PR) plays a critical role during ovulation. Mice lacking the PR gene are anovulatory due to a failure in the rupture of the preovulatory follicles. The pathways that operate downstream of PR to control ovulation are poorly understood. Using gene expression profiling, we identified peroxisome proliferator-activated receptor γ (PPARγ) as a target of regulation by PR in the granulosa cells of the preovulatory follicles during the ovulatory process. To investigate the function of PPARγ during ovulation, we created a conditional knockout mouse in which this gene was deleted via Cre-Lox-mediated excision in granulosa cells. When these mutant mice were subjected to gonadotropin-induced superovulation, the preovulatory follicles failed to rupture and the number of eggs released from the mutant ovaries declined drastically. Gene expression analysis identified endothelin-2, interleukin-6, and cyclic GMP-dependent protein kinase II as novel targets of regulation by PPARγ in the ovary. Our studies also suggested that cycloxygenase 2-derived metabolites of long-chain fatty acids function as endogenous activating ligands of PPARγ in the preovulatory follicles. Collectively, these studies revealed that PPARγ is a key mediator of the biological actions of PR in the granulosa cells and activation of its downstream pathways critically controls ovulation.