BACKGROUND & AIMS: The peroxisome proliferator-activated receptor delta (PPARD) regulates cell metabolism, proliferation, and inflammation and has been associated with gastric and other cancers. Villin-positive epithelial cells are a small population of quiescent gastric progenitor cells. We expressed PPARD from a villin promoter to investigate the role of these cells and PPARD in development of gastric cancer. METHODS: We analyzed gastric tissues from mice that express the Ppard (PPARD1 and PPARD2 mice) from a villin promoter, and mice that did not carry this transgene (controls), by histology and immunohistochemistry. We performed cell lineage-tracing experiments and analyzed the microbiomes, chemokine and cytokine production, and immune cells and transcriptomes of stomachs of these mice. We also performed immunohistochemical analysis of PPARD levels in 2 sets of human gastric tissue microarrays. RESULTS: Thirty-eight percent of PPARD mice developed spontaneous, invasive gastric adenocarcinomas, with severe chronic inflammation. Levels of PPARD were increased in human gastric cancer tissues, compared with nontumor tissues, and associated with gastric cancer stage and grade. We found an inverse correlation between level of PPARD in tumor tissue and patient survival time. Gastric microbiomes from PPARD and control mice did not differ significantly. Lineage-tracing experiments identified villin-expressing gastric progenitor cells (VGPCs) as the origin of gastric tumors in PPARD mice. In these mice, PPARD up-regulated CCL20 and CXCL1, which increased infiltration of the gastric mucosa by immune cells. Immune cell production of inflammatory cytokines promoted chronic gastric inflammation and expansion and transformation of VGPCs, leading to tumorigenesis. We identified a positive-feedback loop between PPARD and interferon gamma signaling that sustained gastric inflammation to induce VGPC transformation and gastric carcinogenesis. CONCLUSIONS: We found PPARD overexpression in VPGCs to result in inflammation, dysplasia, and tumor formation. PPARD and VGPCs might be therapeutic targets for stomach cancer.