The peroxisome proliferator-activated receptor-beta (PPARbeta) has been implicated in tumorigenesis, but its precise role remains unclear. Here, we show that the growth of syngeneic Pparb wild-type tumors is impaired in Pparb(-/-) mice, concomitant with a diminished blood flow and an abundance of hyperplastic microvascular structures. Matrigel plugs containing pro-angiogenic growth factors harbor increased numbers of morphologically immature, proliferating endothelial cells in Pparb(-/-) mice, and retroviral transduction of Pparb triggers microvessel maturation. We have identified the Cdkn1c gene encoding the cell cycle inhibitor p57(Kip2) as a PPARbeta target gene and a mediator of the PPARbeta-mediated inhibition of cell proliferation, which provides a possible mechanistic explanation for the observed tumor endothelial hyperplasia and deregulation of tumor angiogenesis in Pparb(-/-) mice. Our data point to an unexpected essential role for PPARbeta in constraining tumor endothelial cell proliferation to allow for the formation of functional tumor microvessels.