Gene therapy is becoming an important treatment modality against various diseases including cancer, genetic disorders, infectious diseases and inflammatory diseases. For achieving successful gene therapy, it is extremely important to control the expression of a transduced therapeutic gene. However, there have been few studies examining the effect of glucocorticoid on transgene expression. We demonstrate here that the synthetic glucocorticoid dexamethasone significantly affected transgene expression in vitro. Bone marrow cells freshly prepared from rats and murine fibroblasts were infected with retroviruses carrying the neomycin phosphotransferase gene under the transcriptional control of the retroviral long terminal repeat promoter and the reporter lacZ gene under the transcriptional control of the simian virus 40 (SV40) early promoter. Retrovirus-infected cells were selected by G418. When retrovirus-infected bone marrow cells were cultured in the presence of dexamethasone, lacZ expression was markedly decreased. This suppressive effect of dexamethasone on transgene expression in bone marrow cells appeared to be mediated by a methylation-independent mechanism, because the suppressive effect was also observed in bone marrow cells that were supposed to contain a considerable number of methylated cells. In marked contrast, when retrovirus-infected fibroblasts were cultured in the presence of dexamethasone, lacZ expression was significantly increased. The enhancing and suppressing effects of dexamethasone on transgene expression were considered to be independent on promoter types, because the SV40 early promoter used to control lacZ expression does not contain a glucocorticoid-responsive element. Therefore, the different effects of dexamethasone on transgene expression appeared to be dependent on cell types. These results indicate that dexamethasone may play an important role for achieving successful gene therapy. Furthermore, these observations may also have important implications for future clinical applications of gene therapy.