Surfactant protein-A (SP-A) gene expression in human fetal lung type II cells is stimulated by cAMP and IL-1 and is inhibited by glucocorticoids. cAMP/IL-1 stimulation of SP-A expression is mediated by increased binding of thyroid transcription factor-1 and nuclear factor (NF)-kappaB to the TTF-1-binding element (TBE) in the SP-A promoter. This is associated with decreased expression of histone deacetylases (HDACs), increased recruitment of coactivators, and enhanced acetylation of histone H3 (K9,14) at the TBE. In the present study, endogenous glucocorticoid receptor (GR) was found to interact with thyroid transcription factor-1 and NF-kappaB p65 at the TBE. GR knockdown enhanced SP-A expression in type II cells cultured in serum-free medium, suggesting a ligand-independent inhibitory role of endogenous GR. Furthermore, use of chromatin immunoprecipitation revealed that dexamethasone (Dex) treatment of fetal lung type II cells increased recruitment of endogenous GR and HDACs-1 and -2 and blocked cAMP-induced binding of inhibitor of kappaB kinase-alpha (IKKalpha) to the TBE region. Accordingly, Dex reduced basal and blocked cAMP-stimulated levels of acetylated (K9,14) and phosphorylated (S10) histone H3 at the TBE. Dex also increased TBE binding of dimethylated histone H3 (K9) and of heterochromatin protein 1alpha. Thus, Dex increases interaction of GR with the complex of proteins at the TBE. This facilitates recruitment of HDACs and causes a local decline in basal and cAMP-induced histone H3 phosphorylation and acetylation and an associated increase in H3-K9 dimethylation and binding of heterochromatin protein 1alpha. Collectively, these events may culminate in the closing of chromatin structure surrounding the SP-A gene and inhibition of its transcription.