The potential adverse effect of synthetic glucocorticoid, dexamethasone therapy on the developing heart remains unknown. The present study investigated the effects of dexamethasone on cardiomyocyte proliferation and binucleation in the developing heart of newborn rats and evaluated DNA methylation as a potential mechanism. Dexamethasone was administered intraperitoneally in a three day tapered dose on postnatal day 1 (P1), 2 and 3 to rat pups in the absence or presence of a glucocorticoid receptor antagonist Ru486, given 30 minutes prior to dexamethasone. Cardiomyocytes from P4, P7 or P14 animals were analyzed for proliferation, binucleation and cell number. Dexamethasone treatment significantly increased the percentage of binucleated cardiomyocytes in the hearts of P4 pups, decreased myocyte proliferation in P4 and P7 pups, reduced cardiomyocyte number and increased the heart to body weight ratio in P14 pups. Ru486 abrogated the effects of dexamethasone. In addition, 5-aza-2'-deoxycytidine (5-AZA) blocked the effects of dexamethasone on binucleation in P4 animals and proliferation at P7, leading to recovered cardiomyocyte number in P14 hearts. 5-AZA alone promoted cardiomyocyte proliferation at P7 and resulted in a higher number of cardiomyocytes in P14 hearts. Dexamethasone significantly decreased cyclin D2, but not p27 expression in P4 hearts. 5-AZA inhibited global DNA methylation and blocked dexamethasone-mediated down-regulation of cyclin D2 in the heart of P4 pups. The findings suggest that dexamethasone acting on glucocorticoid receptors inhibits proliferation and stimulates premature terminal differentiation of cardiomyocytes in the developing heart via increased DNA methylation in a gene specific manner.