Lung morphogenesis has been shown to be regulated by glucocorticoids (CORT). Because CORT has been primarily thought to affect fetal lung development, previous studies have focused on the role of CORT receptor (GR)-mediated regulation of fetal lung development. Although endogenous CORT increases during embryonic and fetal stages and exogenous CORT treatment in vivo and in vitro clearly accelerates embryonic lung development, little is known about the morphoregulatory role of the embryonic CORT-GR signal transduction pathway during lung development. In this study, we characterize the embryonic mouse CORT-GR pathway and demonstrate: stage-specific in situ patterns of GR immunolocalization; similarity in GR relative mobility with progressive (E13 --> E17) development; that embryonic GR can be activated to bind a GR response element (GRE); significantly increasing levels of functional GR with increasing lung maturation; and the presence of heat shock protein (hsp) 70 and hsp90 from early (E13) to late (E17) developmental stages. These results support the purported importance of the embryonic CORT-GR signal transduction pathway in progressive lung differentiation. To demonstrate that the embryonic CORT-GR directed pathway plays a role in lung development, early embryonic (E12) lungs were exposed to CORT in utero and surfactant-associated protein A (SP-A) expression was analyzed; CORT treatment up-regulates SP-A mRNA expression and spatiotemporal protein distribution. Finally, to determine whether CORT-GR-directed pulmonary morphogenesis in vivo involves the modulation of growth factors, we studied the effect of CORT on TGF-beta gene expression. Northern analysis of TGF-beta 1, TGF-beta 2, and TGF-beta 3 transcript levels in vivo indicates that CORT regulates the rate of lung morpho- and histodifferentiation by down-regulating TGF-beta 3 gene expression.