Inflammation and antenatal glucocorticoids, the latter given to mothers at risk for preterm birth, affect lung development and may contribute to the development of bronchopulmonary dysplasia (BPD). The effects of the combined exposures on inflammation and antenatal glucocorticoids on transforming growth factor (TGF)-β signaling are unknown. TGF-β and its downstream mediators are implicated in the etiology of BPD. Therefore, we asked whether glucocorticoids altered intra-amniotic lipopolysaccharide (LPS) effects on TGF-β expression, its signaling molecule phosphorylated sma and mothers against decapentaplegic homolog 2 (pSmad2), and the downstream mediators connective tissue growth factor (CTGF) and caveolin-1 (Cav-1). Ovine singleton fetuses were randomized to receive either an intra-amniotic injection of LPS and/or maternal betamethasone (BTM) intramuscularly 7 and/or 14 days before delivery at 120 days gestational age (GA; term = 150 days GA). Saline was used for controls. Protein levels of TGF-β1 and -β2 were measured by ELISA. Smad2 phosphorylation was assessed by immunohistochemistry and Western blot. CTGF and Cav-1 mRNA and protein levels were determined by RT-PCR and Western blot. Free TGF-β1 and -β2 and total TGF-β1 levels were unchanged after LPS and/or BTM exposure, although total TGF-β2 increased in animals exposed to BTM 7 days before LPS. pSmad2 immunostaining increased 7 days after LPS exposure although pSmad2 protein expression did not increase. Similarly, CTGF mRNA and protein levels increased 7 days after LPS exposure as Cav-1 mRNA and protein levels decreased. BTM exposure before LPS prevented CTGF induction and Cav-1 downregulation. This study demonstrated that the intrauterine inflammation-induced TGF-β signaling can be inhibited by antenatal glucocorticoids in fetal lungs.