Expression of the pro-oncogenic mucin MUC1 is elevated by inflammation in airway epithelial cells, but the contributions of MUC1 to the development of lung cancer are uncertain. In this study, we developed our finding that cigarette smoke increases Muc1 expression in mouse lung macrophages, where we hypothesized MUC1 may contribute to cigarette smoke-induced transformation of bronchial epithelial cells. In human macrophages, cigarette smoke extract (CSE) strongly induced MUC1 expression through a mechanism involving the nuclear receptor PPAR-gamma. CSE-induced extracellular signal-regulated kinase (ERK) activation was also required for MUC1 expression, but it had little effect on MUC1 transcription. RNA interference-mediated attenuation of MUC1 suppressed CSE-induced secretion of TNF-alpha from macrophages, by suppressing the activity of the TNF-alpha-converting enzyme (TACE), arguing that MUC1 is required for CSE-induced and TACE-mediated TNF-alpha secretion. Similarly, MUC1 blockade after CSE induction through suppression of PPAR-gamma or ERK inhibited TACE activity and TNF-alpha secretion. Conditioned media from CSE-treated macrophages induced MUC1 expression and potentiated CSE-induced transformation of human bronchial epithelial cells in a TNF-alpha-dependent manner. Together, our results identify a signaling pathway involving PPAR-gamma, ERK, and MUC1 for TNF-alpha secretion induced by CSE from macrophages. Furthermore, our results show how MUC1 contributes to smoking-induced lung cancers that are driven by inflammatory signals from macrophages.