The effects of glucocorticoids on the steroidogenesis of ovarian granulosa cells were investigated. Cortisol and dexamethasone inhibited the increase in aromatase activity induced by FSH in cultured rat granulosa cells. In the same cultures progesterone production was stimulated to a maximum of 167% of the control level. This differential effect of glucocorticoids on estrogen and progesterone production by the granulosa cells indicates that glucocorticoids exert specific inhibition of the induction of aromatase by FSH and do not cause a general suppression of granulosa cell activity. In contrast to their inhibition of the FSH induction of aromatase enzymes, glucocorticoids did not interfere with the activity of pre-existing aromatase enzymes. In granulosa cells containing full aromatase activity, treatment with cortisol and dexamethasone did not inhibit aromatization of androstenedione to estrogens whereas two known aromatase inhibitors (dihydrotestosterone and 4-androstene-3, 6, 17-trione) were effective. These results indicate that the glucocorticoids exert a selective inhibition of the FSH-induction of aromatase activity in rat granulosa cells by a mechanism other than directly interfering with the aromatization reaction.