Enhanced dopamine efflux in the prefrontal cortex is a well-documented response to acute stress. However, the underlying mechanism(s) for this response is unknown. Using in vivo microdialysis, we demonstrate that blocking glucocorticoid receptors locally within the rat prefrontal cortex results in a reduction in stress-evoked dopamine efflux. In contrast, blocking glucocorticoid receptors in the ventral tegmental area did not affect stress-evoked dopamine efflux in the prefrontal cortex. Additionally, local administration of corticosterone into the prefrontal cortex increased prefrontal dopamine efflux. The functional impact of enhanced dopamine efflux evoked by acute stress was demonstrated using a cognitive task dependent on the prefrontal cortex and sensitive to impairment in working memory. Notably, stress-induced impairments in cognition were attenuated by blockade of glucocorticoid receptors in the prefrontal cortex. Taken together, these data demonstrate that glucocorticoids act locally within the prefrontal cortex to modulate mesocortical dopamine efflux leading to the cognitive impairments observed during acute stress.