Lung cancer is the leading cause of cancer-related death in developed countries. Non-small cell lung cancer (NSCLC) represents 80% of the total lung cancer cases and is comprised of adenocarcinoma, adenosquamous carcinoma, squamous cell carcinoma and large cell carcinoma (LCC) subtypes. The ability of LCC to metastasize earlier than the other forms of lung cancer suggests anti-angiogenic drugs as effective agents to combat this cancer. Thalidomide is an anti-angiogenic drug that has shown promise in multiple hematological diseases, and myeloma and other cancers. However, the molecular mechanism by which thalidomide exerts its effects is poorly understood. Therefore, we evaluated the effectiveness of thalidomide on NSCLC cell growth, and found that LCC cells were growth inhibited by 40-60%. This effect seemed specific to LCC cancer cells, since other forms of NSCLC were only mildly affected by thalidomide. At the molecular level, thalidomide increased peroxisome proliferator-activated receptor gamma (PPARgamma) protein dose-dependently, and peroxisome proliferator response element activity. Further, thalidomide treatment of LCC cells decreased nuclear factor kappa B activity in a dose-dependent fashion, increased apoptosis and decreased the expression of angiogenic proteins. In our mouse xenograft model of lung cancer, we found that intratumoral thalidomide caused a 64% decrease in tumor growth; moreover, tumors from the thalidomide-treated mice expressed higher PPARgamma, than tumors from control mice. This study shows the antitumor activity of thalidomide against LCC tumors and suggests a model in which thalidomide exerts its antitumor effects on LCC cells through the induction of PPARgamma and subsequent downstream signaling. To our knowledge, this is the first study to show a link between thalidomide and PPARgamma.