Glucocorticoids (GCS) profoundly inhibit several aspects of T cell immunity largely through inhibition of cytokine expression at the transcriptional and posttranscriptional levels. GCS were also reported to act indirectly by inducing transforming growth factor-beta expression, which in turn blocks T cell immunity. In exerting their antiproliferative effects, GCS diffuse into target cells where they bind their cytoplasmic receptor, which in turn translocates to the nucleus where it inhibits transcription of cytokine genes through direct binding to the glucocorticoid response elements (GRE), which are located in the promoter region of cytokine genes or, alternatively, through antagonism of the action of transcription factors required for optimal transcriptional activation. In contrast to their inhibitory effects on cytokine expression, GCS up-regulate cytokine receptor expression that correlates with enhanced cytokine effects on target cells. In this review, we summarize the current state of knowledge of the mechanism of action of GCS, including the phenomenon of steroid-induced rebound, which ensues upon GCS withdrawal.