Vascular smooth muscle cells (VSMCs) undergo phenotypic changes in response to vascular injury such as angioplasty. Protein kinase G (PKG) has an important role in the process of VSMC phenotype switching. In this study, we examined whether rosiglitazone, a peroxisome proliferator-activated receptor (PPAR)-γ agonist, could modulate VSMC phenotype through the PKG pathway to reduce neointimal hyperplasia after angioplasty. In vitro experiments showed that rosiglitazone inhibited the phenotype change of VSMCs from a contractile to a synthetic form. The platelet-derived growth factor (PDGF)-induced reduction of PKG level was reversed by rosiglitazone treatment, resulting in increased PKG activity. This increased activity of PKG resulted in phosphorylation of vasodilator-stimulated phosphoprotein at serine 239, leading to inhibited proliferation of VSMCs. Interestingly, rosiglitazone did not change the level of nitric oxide (NO) or cyclic guanosine monophosphate (cGMP), which are upstream of PKG, suggesting that rosiglitazone influences PKG itself. Chromatin immunoprecipitation assays for the PKG promoter showed that the activation of PKG by rosiglitazone was mediated by the increased binding of Sp1 on the promoter region of PKG. In vivo experiments showed that rosiglitazone significantly inhibited neointimal formation after balloon injury. Immunohistochemistry staining for calponin and thrombospondin showed that this effect of rosiglitazone was mediated by modulating VSMC phenotype. Our findings demonstrate that rosiglitazone is a potent modulator of VSMC phenotype, which is regulated by PKG. This activation of PKG by rosiglitazone results in reduced neointimal hyperplasia after angioplasty. These results provide important mechanistic insight into the cardiovascular-protective effect of PPARγ.