Corticosteroids (CS) are widely used as immunosuppressive and anti-inflammatory agents, but their mechanism of action is not well understood. In this study we analyzed the effects of CS on the growth and differentiation of human CD4+45RO- "naive" and CD4+45RO+ "memory" T cells. To generate effector T cells secreting large amounts of Th1 and Th2 cytokines, FACS-sorted naive and memory subsets were primed and restimulated in vitro via the TCR in the presence of IL-2. CS added during priming reduced clonal expansion of both T cell populations, but the memory subset was 100-fold less sensitive. At lower concentrations, CS favored the development of effector T cells (from both subsets), which upon restimulation produced large amounts of the anti-inflammatory cytokine IL-10, but low amounts of IL-4, IL-5, or IFN-gamma. Interestingly, CS displayed different effects if it was added only during the restimulation of effector T cells. CS were unable to suppress clonal expansion of restimulated effector T cells. In effector T cells derived from the naive subset, CS induced production of IL-4 and IL-10, but blocked production of IL-5 and IFN-gamma. In effector T cells generated from the memory subset, CS blocked production of IL-4, IL-5, and IL-10, but inhibited production of IFN-gamma by only 50%, even if 100-fold higher concentrations of CS were applied. These results indicate that persistent TCR stimulation, e.g., in chronic infection, may reduce the sensitivity of T cells to the antiproliferative effects of CS. Furthermore, the potential of CS to increase or suppress IL-4 and IL-10 production depending on the stage of T cell activation may explain in part the beneficial effects of CS in the treatment of acute inflammation and chronic allergic/asthmatic diseases.