Depletion of peroxisome proliferator-activated receptor gamma (PPAR gamma) represents one of the key molecular changes that underlie transdifferentiation ( activation) of hepatic stellate cells in the genesis of liver fibrosis ( Miyahara, T., Schrum, L., Rippe, R., Xiong, S., Yee, H. F., Jr., Motomura, K., Anania, F. A., Willson, T. M., and Tsukamoto, H. (2000) J. Biol. Chem. 275, 35715 - 35722; Hazra, S., Xiong, S., Wang, J., Rippe, R. A., Krishna, V., Chatterjee, K., and Tsukamoto, H. ( 2004) J. Biol. Chem. 279, 11392 - 11401). In support of this notion, ectopic expression of PPAR gamma suppresses hepatic stellate cells activation markers, most notably expression of alpha 1( I) procollagen. However, the mechanisms underlying this antifibrotic effect are largely unknown. The present study utilized deletion- reporter gene constructs of proximal 2.2-kb alpha 1( I) procollagen promoter to demonstrate that a region proximal to - 133 bp is where PPAR gamma exerts its inhibitory effect. Within this region, two DNase footprints with Sp1 and reverse CCAAT box sites exist. NF-I, but not CCAAT DNA-binding factor/NF-Y, binds to the proximal CCAAT box in hepatic stellate cells. A mutation of this site almost completely abrogates the promoter activity. NF-I mildly but independently stimulates the promoter activity and synergistically promotes Sp1-induced activity. PPAR gamma inhibits NF-I binding to the most proximal footprint (-97/-85 bp) and inhibits its transactivity. The former effect is mediated by the ability of PPAR gamma to inhibit p300-facilitated NF-I binding to DNA as demonstrated by chromatin immunoprecipitation assay.