Glucocorticoids (GCs) affect peripheral immune responses by inhibiting T cell immunity at several stages of the activation cascade, causing impaired cytokine production and effector function. The recent demonstration that the thymic epithelium and possibly thymocytes themselves produce steroids suggests that endogenous GCs also play a role in the control of T cell development. As both peripheral responsiveness and thymic differentiation appear to be regulated by the quantity and quality of intracellular signals issued by antigen-major histocompatibility complex-engaged T cell receptor (TCR) complexes, we investigated the effects of GCs on the signaling properties of T cells stimulated by anti-CD3 monoclonal antibodies or agonist peptides. We demonstrate in this work that dexamethasone, a synthetic GC, inhibits the early signaling events initiated upon TCR ligation, such as tyrosine phosphorylation of several TCR-associated substrates including the zeta chain, the ZAP70 kinase, and the transmembrane adapter molecule linker for activation of T cells. Hypophosphorylation was not a consequence of reduced kinase activity of src protein tyrosine kinases, but was correlated with an altered- membrane compartmentalization of these molecules. These observations indicate that in addition to their well-described ability to interfere with the transcription of molecules involved in peripheral responses, GCs inhibit T cell activation by affecting the early phosphorylating events induced after TCR ligation.