We have shown that dexamethasone (Dex) accelerates maturation and differentiation of cultured fetal murine lungs (Cilley RE, Zgleszewski SE, Krummel TM, and Chinoy MR. Surg Forum 47: 692-695, 1996). We now demonstrate that although Dex inhibits thinning of acinar walls and secondary septa formation, it does, however, promote lung growth. CD-1 murine fetal lungs were cultured for 7 days in the presence and absence of 10 nM Dex. Dex-modulated genes were investigated and identified by differential display of mRNAs performed with specific anchor primer H-T₁₁G and 24 arbitrary primers. Thirty-five differentially expressed cDNAs were isolated, subcloned, sequenced, and identified through BLAST searches. One of these cDNAs, termed Dex2, with enhanced expression in Dex-treated lungs, had 100% similarity with ras-recision gene (rrg), also known as the lysyl oxidase (LOX) gene that encodes lysyl oxidase. LOX gene is very highly conserved, with significant sequence similarity among mouse, rat, and human. Two other cDNAs, termed Dex1 and Dex4, were also identified as rrg, with 92 and 97% sequence similarity with the existing data bank sequence of rrg. LOX enzyme is known to downregulate p21^ras protein and play a central role in the maturation of collagen and elastin in the extracellular matrix as well as modulate the cytoskeletal elements. Thus LOX may be important in lung developmental processes involving epithelial-mesenchymal interactions.