Cyclic AMP and interleukin-1 (IL-1) induction of surfactant protein-A (SP-A) expression in fetal lung type II cells is mediated by increased binding of thyroid transcription factor-1 (TTF-1) and NF-B proteins p50 and p65 to the TBE (TTF-1-binding element) at -183 bp. In type II cell transfections, dexamethasone (Dex) markedly inhibits cAMP induced expression of rabbit SP-A:hGH fusion genes containing as little as ~300 bp of SP-A 5'-flanking sequence. Dex inhibition is blocked by RU486, suggesting a role of the glucocorticoid receptor (GR). The present study was undertaken to define the mechanisms for GR inhibition of SP-A expression. Co-transfection of primary cultures of type II cells with a GR expression vector abrogated cAMP induction of SP-A promoter activity, while at the same time causing 60-fold induction of co-transfected mouse mammary tumor virus (MMTV) promoter. In lung cells transfected with a fusion gene containing 3-TBEs fused to the basal SP-A promoter, Dex prevented the stimulatory effect of IL-1 on TTF-1 induction of SP-A promoter activity, suggesting that GR inhibits SP-A promoter activity through the TBE. In gel shift assays using nuclear extracts from human fetal type II cells cultured in the absence or presence of cAMP, Dex markedly reduced binding of nuclear proteins to the TBE and blocked the stimulatory effect of cAMP on TBE binding activity. Our finding that Dex increased expression of the NF-B inhibitory partner, IB, suggests that the decrease in TBE binding activity may be caused, in part, by GR inhibition of NF-B interaction with this site.