Hepatic glucose production by gluconeogenesis is the main source of glucose during fasting and contributes significantly to hyperglycemia in diabetes mellitus. Accordingly, glucose metabolism is tightly controlled by a variety of hormones including insulin, epinephrine, glucagon, and glucocorticoids (GCs) acting on various cell types. GC effects are mediated by the GC receptor (GR), a ligand-dependent transcription factor, which in the liver and kidney controls gluconeogenesis by induction of gluconeogenic enzymes. To specifically study the contribution of GC on liver carbohydrate metabolism, we generated mice with an inactivation of the GR gene exclusively in hepatocytes using the Cre/loxP technology. Half of the mutant mice die within the first 2 d after birth most likely due to hypoglycemia. Adult mice have normal blood sugar under basal conditions but show hypoglycemia after prolonged starvation due to reduced expression of genes involved in gluconeogenesis. We further demonstrate that absence of GR in hepatocytes limits the development of hyperglycemia in streptozotocin-induced diabetes mellitus probably due to impaired induction of gluconeogenesis. These findings show the essential role of GR function in liver glucose metabolism during fasting and in diabetic mice and indicate that liver-specific GC antagonists could be beneficial in control of diabetic hyperglycemia.