The history of glucocorticosteroid therapy and modern rheumatology are inseparable. Glucocorticosteroids exert profound effects on the inflammatory and immune responses. They affect the growth, differentiation and function of monocytes and lymphocytes, the distribution of cellular subsets, and the production of cytokines. Glucocorticosteroid-induced lipocortins inhibit eicosanoid production and release by suppressing phospholipase A2. The principal mechanism whereby they exert their powerful effects is through modulation of the transcription of specific sets of genes. Recently, post-transcriptional mechanisms have also been recognized to be affected by glucocorticosteroids. In this review we discuss the molecular and cellular aspects of glucocorticosteroid action on the immune system.