A chromosomal translocation results in the production of a paired box 8-peroxisome proliferator-activated receptor gamma (PAX8-PPARG) fusion protein (PPFP) in ∼35% of follicular thyroid carcinomas. To examine the role of PPFP in thyroid oncogenesis, the fusion protein was stably expressed in the non-transformed rat thyroid cell line PCCL3. PPFP conferred on PCCL3 cells the ability to invade through Matrigel and to form colonies in anchorage-independent conditions. PPFP also increased the fraction of cells with Wnt/TCF-responsive green fluorescent protein reporter gene expression. This Wnt/TCF-activated population was enriched for colony-forming and invading cells. These actions of PPFP required a functional PPARG DNA binding domain (DBD) within PPFP and were further stimulated by PPARG agonists. These data indicate that PPFP, through its PPARG DBD, induces Wnt/TCF pathway activation in a subpopulation of cells, and these cells have properties of cellular transformation including increased invasiveness and anchorage-independent growth.