Abnormalities contributing to the pathogenesis of non-insulin-dependent diabetes mellitus include impaired beta cell function, peripheral insulin resistance, and increased hepatic glucose production. Glucocorticoids are diabetogenic hormones because they decrease glucose uptake and increase hepatic glucose production. In addition, they may directly inhibit insulin release. To evaluate that possible role of glucocorticoids in beta cell function independent of their other effects, transgenic mice with an increased glucocorticoid sensitivity restricted to their beta cells were generated by overexpressing the glucocorticoid receptor (GR) under the control of the insulin promoter. Intravenous glucose tolerance tests showed that the GR transgenic mice had normal fasting and postabsorptive blood glucose levels but exhibited a reduced glucose tolerance compared with their control littermates. Measurement of plasma insulin levels 5 min after intravenous glucose load demonstrated a dramatic decrease in acute insulin response in the GR transgenic mice. These results show that glucocorticoids directly inhibit insulin release in vivo and identify the pancreatic beta cell as an important target for the diabetogenic action of glucocorticoids.