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Peroxisome proliferator-activated receptors (PPARs) represent therapeutic targets for the management of type 2 diabetes mellitus and dyslipidemia. Rodent carcinogenicity studies have revealed a link between γ and dual γ/α PPAR agonist treatment and the increased incidence of subcutaneous (SC) liposarcomas/fibrosarcomas or hemangiosarcomas, but very little has been reported for potent and selective PPARα agonists. We present a mode of action framework for the development of SC mesenchymal tumors in rodents given PPAR agonists. (1) Tumor promotion results from pharmacologically mediated recruitment (proliferation and differentiation), thermogenesis and adipogenesis of stromovascular cells, and subsequent generation of oxidative free radicals. (2) Tumor initiation consists of chemotype-driven mitochondrial dysfunction causing uncontrolled oxidative stress and permanent DNA damage. Promotion is characterized by enhanced adipogenesis in the SC adipose tissue, where the baseline PPARγ expression and responsiveness to PPARγ ligands is the highest, and by thermogenesis through expression of the uncoupling protein 1 (UCP-1) and the PPARγ co-activator 1 α (PGC-1α), two factors more highly expressed in brown versus white adipose tissue. Initiation is supported by the demonstration of mitochondrial uncoupling and OXPHOS Complexes dysfunction (Complexes III, IV and V) by compounds associated with increased incidences of sarcomas (muraglitazar and troglitazone), but not others lacking malignant tumor effects (pioglitazone, rosiglitazone).