Hypoxia inhibits Na- and lung fluid reabsorption, which contributes to the formation of pulmonary edema. We tested whether dexamethasone prevents hypoxia-induced inhibition of reabsorption by stimulation of alveolar Na-transport. Fluid reabsorption, transport activity, and expression of Na-transporters were measured in hypoxia-exposed rats and in primary alveolar type II (ATII) cells. Rats were treated with dexamethasone (DEX; 2mg/kg) on 3 consecutive days and exposed to 10%O₂ on the 2^nd and 3^rd day of treatment to measure hypoxia-effects on reabsorption of fluid instilled into lungs. ATII cells were treated with DEX (1 µM) for 3 days before exposure to hypoxia (1.5% O₂). In normoxic rats DEX induced a 2-fold increase in alveolar fluid clearance. Hypoxia decreased reabsorption (-30%) by decreasing its amiloride-sensitive component; pretreatment with DEX prevented the hypoxia-induced inhibition. DEX increased short circuit currents (ISC) of ATII monolayers in normoxia and blunted hypoxic transport inhibition by increasing the capacity of Na/K-ATPase and ENaC and amiloride-sensitive ISC. DEX slightly increased the mRNA of and ENaC in whole rat lung. In ATII cells from DEX treated rats mRNA of 1-Na/K-ATPase and -ENaC increased in normoxia and hypoxia, -ENaC was increased in normoxia only. DEX stimulated the mRNA expression of 1-Na/K-ATPase and -, -, and -ENaC of A549 cells in normoxia and hypoxia (1.5% O₂) when DEX-treatment begun before or during hypoxic exposure. These results indicate that DEX prevents inhibition of alveolar reabsorption by hypoxia and that DEX stimulates the expression of Na-transporters even when it is applied in hypoxia.