In the lungs, neuronal M₂ muscarinic receptors inhibit acetylcholine release from the parasympathetic nerves. Parainfluenza virus infection causes loss of M₂ receptor function, which increases acetylcholine release and vagally mediated bronchoconstriction. Since glucocorticoids are known to inhibit airway hyperresponsiveness, we tested whether dexamethasone (6.5 µg/kg or 65 µg/kg, i.p.) prevents virus-induced hyperresponsiveness and M₂ receptor dysfunction in guinea pigs. In controls, pilocarpine, a muscarinic agonist, inhibited vagally induced bronchoconstriction, demonstrating functional M₂ receptors. However, in virus-infected animals, pilocarpine failed to inhibit vagally induced bronchoconstriction demonstrating M₂ receptor dysfunction. Frequency dependent bronchoconstriction was greater in virus infected than in controls, indicating airway hyperresponsiveness. Low dose dexamethasone (6.5 µg/kg i.p.) treatment prevented virus induced airway hyperresponsiveness, ameliorated M₂R dysfunction, and decreased viral content in the lungs without inhibiting virus induced inflammation. High dose dexamethasone (65 µg/kg i.p.) prevented virus induced hyperresponsiveness, completely reversed M₂ receptor dysfunction, decreased viral titers, and decreased virus induced inflammation. This high dose dexamethasone also increased M₂ receptor function in uninfected animals. In conclusion, dexamethasone prevented virus induced hyperresponsiveness and M₂ receptor dysfunction via multiple mechanisms.