W orking with the murine epidermal-derived dendritic cell (DC) line XS52, we have observed previously that antigen-specific interaction with T cells stimulates their "terminal maturation" into fully professional DC. In this study we examined the impact of dexamethasone (DEX) on this T cell-induced event. When added to cocultures of XS52 DC and the KLH-specific Th1 clone HDK-1 in the presence of antigen, DEX at relatively low concentrations (10(-9)-10(-7) M) prevented substantially or completely each of the changes that typify terminal maturation, including (a) secretion of relatively large amounts of IL-1beta, IL-6, and TNFalpha; (b) loss of CD115 (colony-stimulating factor-1 receptor) expression and proliferative responsiveness to colony-stimulating factor-1; and (c) elevated expression of CD86 (B7-2). XS52 cells also underwent terminal maturation upon exposure to lipopolysaccharide alone, and DEX also inhibited effectively each of the same changes, indicating that DC can serve as the direct target of DEX. By contrast, DEX inhibited XS52 DC-stimulated IL-2 secretion by HDK-1 T cells, but not other changes that accompany T cell activation, including the secretion of IFNgamma and TNFalpha and the elevated expression of CD25, CD28, and CD44. These results reveal a new immunosuppressive mechanism of glucocorticoid action, that is, direct inhibition of T cell-mediated terminal maturation by DC.