In a rat model, downregulation of homeostatic mesenchymal peroxisome proliferator-activated receptor-gamma (PPAR-gamma) signaling following perinatal nicotine exposure contributes to offspring asthma, which can be effectively prevented by concomitant administration of PPAR-gamma agonist rosiglitazone (RGZ). However, whether perinatal nicotine exposure-induced asthma can be reversed is not known. We hypothesized that perinatal nicotine exposure-induced asthma would be reversed by PPAR-gamma agonist RGZ. Pregnant rat dams received either placebo or nicotine from embryonic day 6 until term. Following spontaneous delivery at term, dams were continued on the assigned treatments, up to postnatal day 21 (PND21). However, at delivery, pups were divided into two groups; one group received placebo, and the other group received RGZ from PND1 to PND21. At PND21, pulmonary function and the expression of mesenchymal markers of airway contractility (alpha-smooth muscle actin, calponin, fibronectin, collagen I, and collagen III) were determined by immunoblotting and immunostaining for the evidence of reversibility of perinatal nicotine exposure-induced lung effects. Compared with controls, perinatal nicotine exposure caused 1) a significant increase in airway resistance and a decrease in airway compliance following methacholine challenge, 2) a significant increase in acetylcholine-induced tracheal constriction, and 3) increased pulmonary and tracheal expression of the mesenchymal markers of contractility. Treatment with RGZ, starting on PND1, reversed all of the nicotine-induced molecular and functional pulmonary effects, virtually normalizing the pulmonary phenotype of the treated animals. We conclude that perinatal nicotine exposure-induced functional and molecular alterations in upper and lower airways can be reversed by PPAR-gamma agonist RGZ, allowing an effective intervention even when started postnatally.