Glucocorticoids (GCs) are important therapeutic agents for a wide-variety of inflammatory diseases but are known to have potentially detrimental side-effects such as osteoporotic bone-loss. These effects of GCs are mediated via the intracellular GC receptor (GR) and by local GC metabolism catalyzed by 11beta-hydroxysteroid dehydrogenase (11beta-HSD). We have postulated that autocrine activation of GCs via 11beta-HSD1 plays a key role in counteracting the effects of inflammatory cytokines but may also exacerbate the effects of therapeutic steroids on bone-forming osteoblasts. We have examined the effects of GCs and the inflammatory cytokine interleukin-1 (IL-1) on expression of 11beta-HSD1 in osteoblast models. Treatment of osteoblastic MG-63 cells with IL-1 (0.1-10 ng/ml) for 48 hrs upregulated 11beta-HSD1 with little change in GRalpha or GRbeta expression. Luciferase-based promoter-reporter analyses indicated that this was mediated via the DNA motif -1.4kb upstream of the 11beta-HSD1 transcriptional start-site. In MG-63 cells IL-1 also stimulated expression of the RANK-decoy molecule osteoprotegerin (OPG) and the cyclooxygenase COX-2. By contrast dexamethasone and cortisol suppressed OPG and COX-2 expression and this effect persisted even in the presence of IL-1. However, treatment with IL-1 in combination with dexamethasone or cortisol synergistically enhanced 11beta-HSD1 expression. Further studies were carried out to assess whether similar responses were also observed with other steroid hormone receptor ligands. The PPARgamma ligand rosiglitazone suppressed IL-1 induced OPG and COX-2 expression but had relatively modest effects on 11beta-HSD1 expression. These data suggest that the synergistic effect of GCs and IL-1 on 11beta-HSD1 are due to a novel transcriptional regulation mechanism as opposed to a non-specific anti-inflammatory response. We postulate that exposure to GCs and inflammatory cytokines substantially increases the capacity for autocrine activation of endogenous GCs in osteoblasts. Further analysis of this mechanism may provide new insights on the pathogenesis of steroid-induced osteoporosis.