The effect of dexamethasone on rat alpha-fetoprotein (AFP) expression has been further examined. Quantitation of serum AFP levels from newborns treated with dexamethasone showed a dose-response relationship between the quantity of dexamethasone administered and the reduction in AFP serum level. RNA blots, utilizing cloned AFP cDNA as probe, showed a marked reduction in AFP mRNA in dexamethasone treated livers. The extent of AFP mRNA depletion was correlated with dexamethasone dosage. The effect of dexamethasone on AFP mRNA concentration was relatively rapid; a substantial reduction occurred 12 hours after a single injection. The effect of dexamethasone appeared to be irreversible as hormone withdrawal did not cause AFP mRNA levels to rise. One putative AFP nuclear RNA precursor was identified which rapidly disappeared following dexamethasone treatment. AFP mRNA synthesis was also diminished in nuclei transcribed in vitro. The direct inhibitory effect of glucocorticoid hormone on AFP gene transcription was demonstrated in a reconstituted cell-free nuclear system.