Clinical studies suggest that agonists at peroxisome proliferator-activated receptor gamma (PPARgamma) may exert beneficial effects in patients with mild-to-moderate Alzheimer's disease (AD), but the mechanism for the potential therapeutic interest of this class of drugs has not yet been elucidated. Here, in mice overexpressing mutant human amyloid precursor protein, we found that chronic treatment with rosiglitazone, a high-affinity agonist at PPARgamma, facilitated beta-amyloid peptide (Abeta) clearance. Rosiglitazone not only reduced Abeta burden in the brain but, importantly, almost completely removed the abundant amyloid plaques observed in the hippocampus and entorhinal cortex of 13-month-old transgenic mice. In the hippocampus, neuropil threads containing phosphorylated tau, probably corresponding to dystrophic neurites, were also decreased by the drug. Rosiglitazone switched on the activated microglial phenotype, promoting its phagocytic ability, reducing the expression of proinflammatory markers and inducing factors for alternative differentiation. The decreased amyloid pathology may account for the reduction of p-tau-containing neuropil threads and for the rescue of impaired recognition and spatial memory in the transgenic mice. This study provides further insights into the mechanisms for the beneficial effect of rosiglitazone in AD patients.