The lung is a major clinical target of glucocorticoid-based therapeutics, and GR signaling has broad effects on respiratory physiology and inflammation. During lung development, expression of GR in the mesenchyme is required for normal terminal alveolar epithelial differentiation. Prenatal administration of exogenous glucocorticoids (GCs) to prevent neonatal respiratory distress syndrome, however, promotes alveolar maturation and accelerates surfactant expression in a manner consistent with direct effects on the developing alveolar epithelium. Likewise, cell autonomous effects of GCs in regulating gene expression and phenotype of the airway epithelium and airway smooth muscle have been demonstrated to control important therapeutic effects of GCs in treating asthma and chronic obstructive pulmonary disease. Here, mechanisms and consequences of GR signaling in the developing lung and in treating obstructive lung disease are reviewed, with a focus on direct effects of GR signaling on alveolar differentiation, surfactant expression, and airway epithelial and smooth muscle pathophysiology.