Up to 30% of patients with autoimmune, allergic, and lymphoproliferative diseases are refractory to glucocorticoid therapy. The present study was undertaken to investigate whether such steroid resistance (SR) is limited to a subpopulation of CD4(+) T cells and, as IL-2 is a putative driver of SR, whether T cell SR is associated with CD25 expression. We show that SR patients have a characteristic subgroup of activated CD4(+) T cells that continue to proliferate despite exposure to high-dose Dexamethasone (Dex), demonstrate that CD4(+)CD25(-) cells are exquisitely sensitive to Dex whereas CD4(+)CD25(int) cells are highly SR, and further find that the combination of an anti-CD25 mAb with Dex enhances suppression of T cell proliferation compared with each agent alone. We therefore conclude that SR is not a general property of all lymphocytes but resides in T cell subpopulations, which are prevalent in SR patients and express intermediary levels of CD25. As a result, we propose a new paradigm for SR disease in which glucocorticoid therapy positively selects SR cells, generating a population of drug-resistant lymphocytes that perpetuate on-going inflammation.