Melatonin, the principal hormone of the pineal gland, elicits potent anti-stress, anti-aging and oncostatic properties and influences various immunological and endocrinological functions. We have previously described the effects of melatonin on glucocorticoid receptors and suggested its potential influence on gene transcription. In the present study, the mechanistic basis for melatonin effects on glucocorticoid receptor (GR)-dependent gene expression was examined. Activation of the melatonin transduction pathway affects type I glucocorticoid receptor expression and reduces its transcriptional activity. Coexpression of the intact melatonin and glucocorticoid receptors with MMTV promoter construct reduced the GR transcriptional activity. N- and C-terminus deletions of melatonin receptor revealed the existence of regulatory sites mediating this process. These data identify for first time one of the molecular targets of melatonin action and suggest that melatonin signaling may involve relatively direct signal transmission from the cell surface to the nucleus.