Glucocorticoids (GCs) exert profound effects on bone and are essential for human osteoblast differentiation. However, GCs are still interpreted as negative regulators of bone formation, mainly caused by the detrimental effects on bone after clinical use of GCs. In this paper we emphasize the importance of GCs for proper human osteoblast differentiation and matrix mineralization. We show that human osteoblast differentiation needs to be triggered by GCs in a specific time-window during the early stages of development. Exposure to GCs in the beginning of osteoblast development induces a dose dependent increase in alkaline phosphatase activity and matrix mineralization. GC-induced differentiation stimulated expression of genes involved in bone formation and suppressed genes that negatively regulate bone formation and mineralization. Furthermore we highlight the importance of local cortisol activation in osteoblasts by expression of 11beta-hydroxysteroid dehydrogenase 1 (11beta-HSD1).