In fetal sheep the prepartum increase in plasma cortisol concentration is associated with an increase in high affinity corticosteroid binding activity in plasma. This appears to reflect an increase in corticosteroid-binding globulin (CBG) biosynthesis from the fetal liver, and evidence is presented that hepatic CBG gene expression is increased by exposure to glucocorticoids in the fetus. Immunoreactive CBG is found in other fetal tissues, and CBG mRNA is present in fetal pituitary. CBG reduces the ability of cortisol to exert negative feedback on basal or CRH-stimulated ACTH output by fetal sheep pituitary cells in culture. We suggest that CBG interacts with cortisol in a manner that maintains a low negative feedback on the pituitary, and perhaps hypothalamus. This constitutes a component of the cascade of events that is associated with hypothalamic-pituitary-adrenal activation in the late gestation fetus, and with the onset of parturition.