Endothelial cells (ECs) exposed to shear stress may exert paracrine effects to modulate the phenotype of smooth muscle cells (SMCs). We investigated the role of shear stress on ECs in SMC phenotypic modulation, using our EC/SMC co-culture system in which these 2 types of cells were separated by a porous membrane. Application of shear stress (12 dynes/cm2) to EC/SMC induced SMC phenotypic change to a contractile state. This phenotypic change of SMCs was also observed by treating SMCs with media collected from ECs. For SMCs transfected with ligand-binding domains of peroxisome proliferator activated receptor (PPAR)-, –, or –, treatment with media from ECs induced the ligand binding activities of these PPARs, suggesting that ECs exposed to shear stress release ligands of these PPARs. The shear-induced SM22 expression in SMCs was inhibited by treating SMCs with antagonists of PPAR- (MK886) and – (sulindac sulfide), suggesting that PPAR-/ pathways play a role in SMC phenotypic change. Shear stress to ECs induced their release of prostacyclin, which contributes to phenotypic modulation of SMCs. Our findings provide new insights into the role of shear stress on ECs in phenotypic modulation of SMCs.