Acting via the glucocorticoid receptor (GR), glucocorticoids exert potent anti-inflammatory effects partly by repressing inflammatory gene transcription occurring via factors such as NF-kappaB. In the present study, the synthetic glucocorticoid, dexamethasone, induces expression of MKP-1 (mitogen-activated protein kinase (MAPK) phosphatase-1) in human bronchial epithelial (BEAS-2B) and pulmonary (A549) cells. This correlates with reduced TNFalpha-stimulated p38 MAPK phosphorylation. Since NF-kappaB-dependent transcription and IL-8 protein, mRNA, and unspliced RNA (a surrogate of transcription rate) are sensitive to p38 MAPK inhibitors (SB203580 and SB239063), we explored the role of MKP-1 in repression of these outputs. Repression of TNFalpha-induced p38 MAPK phosphorylation, NF-kappaB-dependent transcription, and IL-8 expression by dexamethasone are sensitive to transcriptional or translational inhibitors. This indicates a role for de novo gene synthesis. Adenoviral expression of MKP-1 profoundly reduces p38 MAPK phosphorylation and IL-8 expression. Similarly, NF-kappaB-dependent transcription is significantly reduced to levels consistent with maximal p38 MAPK inhibition. Thus, MKP-1 attenuates TNFalpha-dependent activation of p38 MAPK, induction of IL-8 expression, and NF-kappaB-dependent transcription. Small interfering RNA knockdown of dexamethasone-induced MKP-1 expression partially reverses the repression of TNFalpha-activated p38 MAPK, demonstrating that MKP-1 participates in the dexamethasone-dependent repression of this pathway. In the presence of MKK6 (MAPK kinase 6), a p38 MAPK activator, dexamethasone dramatically represses TNFalpha-induced NF-kappaB-dependent transcription, and this is significantly reversed by MKP-1-targeting small interfering RNA. This reveals an important and novel role for transcriptional activation (transactivation) of MKP-1 in the repression of NF-kappaB-dependent transcription by glucocorticoids. We conclude that GR transactivation is essential to the anti-inflammatory properties of GR ligands.