Cortisol is a steroid hormone produced in response to stress. This glucocorticoid can be toxic to neurons, and thus may be important in neurodegenerative diseases including Alzheimer's disease. Activated microglia produce molecules including nitric oxide (NO) and tumor necrosis factor-alpha (TNF-alpha) which can also be toxic to neurons. The current study was designed to determine the effect of cortisol upon the activation of primary cultured microglia and transformed N9 microglial cells. The studies indicate that cortisol represses lipopolysaccharide (LPS) induction of nitric oxide production in these microglial cells. The hormone acts by inhibiting the production of inducible nitric oxide synthase (iNOS) which catalyses the synthesis of NO. Cortisol likely acts by blocking transcription of iNOS gene expression since the hormone represses LPS induction of iNOS RNA levels in these cells. Activated microglia produce increased TNF-alpha, in addition to increased NO. The current studies demonstrate that cortisol inhibits release of TNF-alpha from LPS-treated microglial cells. Collectively, these data suggest that although cortisol may be directly toxic to neurons, the hormone may indirectly protect neurons by blocking the production of cytotoxic molecules by microglia.