Mycophenolic acid (MPA) has been known for decades to be an anticancer and immunosuppressive agent and has significant anticancer properties, but its underlying molecular mechanisms are poorly characterized. Peroxisome proliferator-activated receptor gamma (PPARγ) has a central role in adipocyte differentiation, and MPA has been shown to be a potent PPARγ agonist. Whether PPARγ activation has a putative role in the anticancer efficacy of MPA via induction of adipocyte-like differentiation has not been elucidated. In the present study, MPA was demonstrated to dose-dependently activate PPARγ transcription in the GAL4-hPPARγ (LBD) chimeric receptor assay and PPRE-luc reporter gene assay with an EC₅₀ of 5.2–9.3 μM. Treatment of the breast cancer cell lines MDA-MB-231 and MCF-7 with MPA resulted in differentiation of adipose tissue that was characterized by accumulation of intracellular lipids, enlargement of cell volume, and permanent withdrawal from the cell cycle at the G1/G0 stage. At a molecular level, the expression of three adipocyte differentiation markers (PPARγ, adipsin D, and aP2) was remarkably induced in differentiated breast cancer cells. However, RNA interference experiments showed that PPARγ-knockdown cannot completely reverse the differentiated state of MDA-MB-231 cells after MPA treatment. These data suggest that the effects of MPA on adipocyte-like terminal differentiation of breast cancer cells are (at least in part) due to PPARγ activation, which is a novel anticancer mechanism of MPA.