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The aim of the present work was to decipher the cellular basis of the immuno-regulatory role of peroxisome proliferator-activated receptor (PPAR)-alpha in cutaneous hypersensitivity reactions. After challenge with a contact allergen, we observed augmented hypersensitivity reactions with increased numbers of activated T-lymphocytes in the skin of PPAR-alpha(-/-) mice. Furthermore, following antigen challenge, the percentages of regulatory T-cells (Tregs) in the blood, draining lymph nodes and skin were decreased in these mice. PPAR-alpha deficiency impaired the production of IL-2 in lymph nodes, whereas TGF-beta levels remained unchanged. Injection of IL-2 into PPAR-alpha(-/-) mice restored the Treg population in the skin draining lymph nodes of allergen challenged mice. In vivo induction of Tregs from wild type CD4(+) CD25(-) T-cells was impaired when adoptively transferred into PPAR-alpha(-/-) mice as compared with transfer into wild type mice, and reversed by injection of IL-2 into PPAR-alpha(-/-) mice. Furthermore, the suppressive capacity of PPAR-alpha(-/-) Tregs was impaired when compared to wild type Tregs in vitro and in co-adoptive transfer experiments. Finally, injection of IL-2 to PPAR-alpha(-/-) mice decreased skin inflammation to a level similar to wild type mice. In conclusion, the pro-inflammatory skin phenotype of PPAR-alpha(-/-) mice is due to lack of IL-2-mediated Treg induction in these mice.