Thy-1 is a glycosylphosphytidylinositol-linked cell-surface glycoprotein present on a subset of lung fibroblasts, which plays an important role in postnatal alveolarization. In the present study, we define the role of Thy-1 in pulmonary lipofibroblast differentiation and in the regulation of lipid homeostasis via peroxisome proliferator–activated receptor–γ (PPARγ). Thy-1 was associated with interstitial cells containing lipid droplets in vivo. The transfection of Thy-1 into Thy-1 (−) fibroblasts increased triglyceride content, fatty-acid uptake, and the expression of the lipofibroblast marker adipocyte differentiation–related protein. Thy-1 (+) fibroblasts exhibited 2.4-fold higher PPARγ activity, and the inhibition or activation of PPARγ reduced and increased triglyceride content, respectively. Thy-1 (−) fibroblasts were not responsive to either of the PPARγ agonists ciglitazone or prostaglandin J₂, supporting the importance of Thy-1 in signaling via PPARγ. Thy-1 (+) fibroblasts expressed significantly higher concentrations of fatty-acid transporter protein–3 mRNA, and demonstrated higher rates of fatty-acid uptake and increased triglyceride content. The inhibition of fatty-acid transporter protein function reduced Thy-1 (+) fibroblast lipid content. The expression of Thy-1 in C57BL/6 lung fibroblasts increased during the neonatal period, coinciding with the onset of alveolarization. Thy-1 promoted lipofibroblast differentiation via the expression of PPARγ, stimulated lipid accumulation via fatty-acid esterification, and enhanced the fatty-acid uptake mediated by fatty-acid transporter proteins. Thy-1 is important in the regulation of lipofibroblast differentiation in the developing lung.