Nuclear factor-κB (NFκB) and peroxisome proliferator activated receptor-γ (PPARγ) are both transcription factors that perform distinct but overlapping roles in cellular regulation. Here we report that PPARγ acts as an E3 ubiquitin ligase, physically interacting with p65 to induce its ubiquitination and degradation. The ligand-binding domain of PPARγ interacts with the Rel Homology Domain region of NFκB/p65 to undergo robust ubiquitination and degradation that was independent of PPARγ transcriptional activity. Moreover, the ligand-binding domain of PPARγ delivered Lys48-linked polyubiquitin, resulting in the ubiquitination and degradation of p65. Lys28 was found to be critically important for PPARγ-mediated ubiquitination and degradation of p65, as it terminated both NFκB/p65-mediated pro-inflammatory responses and xenograft tumours. These findings demonstrate that PPARγ E3 ubiquitin ligase activity induces Lys48-linked ubiquitination and degradation of p65, and that this function is critical to terminate NFκB signalling pathway-elicited inflammation and cancer.