Between the 4th and 10th days of postnatal life in the rat, serum corticosterone levels were low and basal, while the rate of [3H]thymidine incorporation into lung DNA was maximal. From day 13, serum corticosterone levels began to rise significantly, and the lung [3H]thymidine incorporation rate began to fall dramatically; however, these events were obtunded by propylthiouracil-induced hypothyroidism. When 6- to 8-day-old euthyroid pups were given a single sc injection of 10 micrograms dexamethasone, the rate of DNA synthesis in the lung fell by 96.7% of the initial rate at 24 h. This steroidal effect was blunted in hypothyroid pups and restored by exogenous thyroid hormone. The thyroid status of the pup did not modify the response patterns of lung phosphodiesterase and cytosolic glucocorticoid receptor levels to dexamethasone treatment, although both parameters were influenced by thyroid hormone availability. Radiocholine incorporation into lung phospholipids, which was altered in hypothyroidism, was unaffected by dexamethasone treatment. An in vivo assessment of radiothymidine incorporation into DNA of various tissues in 5-day-old euthyroid pups given 10 micrograms dexamethasone 24 h earlier revealed that of the several tissues in which inhibition of DNA synthesis was demonstrable, the developing lung was the most sensitive to the anti-mitogenic steroidal effect. When considered in the light of existing evidence, these observations suggest that glucocorticoids play an important role in triggering lung cytodifferentiation during the third postnatal week in the rat, and that preconditioning of the lung by thyroid hormone optimizes this developmental effect of glucocorticoids.