Dexamethasone and transforming growth factor-beta (TGF-beta) show contrary effects on differentiation of adipocytes. Dexamethasone stimulates adipocyte differentiation whereas TGF-beta inhibits it. In the present study, we investigated whether dexamethasone could reverse the TGF-beta-mediated inhibition of preadipocyte differentiation. Primary rat preadipocytes, obtained from Sprague-Dawley rats, were pretreated with dexamethasone in the presence or absence of TGF-beta, prior to the induction of differentiation. Co-treatment of dexamethasone and TGF-beta before inducing differentiation reversed the TGF-beta-mediated inhibition of preadipocyte differentiation. In order to elucidate the mechanism by which dexamethasone reversed the effect of TGF-beta on the inhibition of preadipocyte differentiation, the expression of CCAAT/enhancer binding protein-alpha (C/EBPalpha) and peroxisome proliferator-activated receptor gamma (PPARgamma) was examined. Dexamethasone increased C/EBPalpha and PPARgamma expression in the absence of TGF-beta and also recovered the TGF-beta-mediated suppression of C/EBPalpha expression in preadipocytes. Its effect was sustained in differentiated adipocytes as well. However, those effects were not observed in 3T3-L1 preadipocytes or differentiated adipocytes. These results indicate that dexamethasone reverses the TGF-beta-mediated suppression of adipocyte differentiation by regulating the expression of C/EBPalpha and PPARgamma, which is dependent on the cellular context.