Despite clinical promise, dual-acting activators of PPARalpha and gamma (here termed PPARalpha+gamma agonists) have experienced high attrition rates in preclinical and early clinical development, due to toxicity. In some cases, discontinuation was due to carcinogenic effect in the rat urothelium, the epithelial layer lining the urinary bladder, ureters, and kidney pelvis. Chronic pharmacological activation of PPARalpha is invariably associated with cancer in rats and mice. Chronic pharmacological activation of PPARgamma can in some cases also cause cancer in rats and mice. Urothelial cells coexpress PPARalpha as well as PPARgamma, making it plausible that the urothelial carcinogenicity of PPARalpha+gamma agonists may be caused by receptor-mediated effects (exaggerated pharmacology). Based on previously published mode of action data for the PPARalpha+gamma agonist ragaglitazar, and the available literature about the role of PPARalpha and gamma in rodent carcinogenesis, we propose a mode of action hypothesis for the carcinogenic effect of PPARalpha+gamma agonists in the rat urothelium, which combines receptor-mediated and off-target cytotoxic effects. The proposed mode of action hypothesis is being explored in our laboratories, towards understanding the human relevance of the rat cancer findings, and developing rapid in vitro or short-term in vivo screening approaches to faciliate development of new dual-acting PPAR agonist compounds.