Glucocorticoids are among the most potent anti-inflammatory and immunosuppressive agents. They inhibit synthesis of almost all known cytokines and of several cell surface molecules required for immune function, but the mechanism underlying this activity has been unclear. Here it is shown that glucocorticoids are potent inhibitors of nuclear factor kappa B (NF-κB) activation in mice and cultured cells. This inhibition is mediated by induction of the IκBα inhibitory protein, which traps activated NF-κB in inactive cytoplasmic complexes. Because NF-κB activates many immunoregulatory genes in response to pro-inflammatory stimuli, the inhibition of its activity can be a major component of the anti-inflammatory activity of glucocorticoids.