To study the anti-inflammatory mechanisms of glucocorticoids, we have compared the effects of intratracheal carrageenin (2.5 mg) on control rats and those in which inflammation was subdued by prior dexamethasone treatment (10 mg/l in drinking water). Inflammation was maximal 48 h post-carrageenin. After dexamethasone, carrageenin caused tittle inflammation or oedema (wet lung (mg), n = 6, mean +/- S.E.M.; control, 995 +/- 51; carrageenin + dexamethasone, 1144 +/- 83; compared with carrageenin alone, 1881 +/- 198), but rats had more lung lavage neutrophils than those given carrageenin alone (PMN x 10(6) /lung, mean +/- S.E.M.; control, 0.055 +/- 0.003; carrageenin + dexamethasone, 8.54 +/- 1.52; compared with carrageenin alone, 6.30 +/- 1.71). Proteolysis and partial inactivation of the anti-inflammatory mediator, lipocortin 1 (Lcl), in carrageenin-instilled rats was offset in those also given dexamethasone, by increased Lc1 levels (intact Lc1 ng/ml lavage fluid, n = 4, mean +/- S.E.M.; control 24 +/- 6; carrageenin 15 +/- 4; carrageenin + dexamethasone, 40 +/- 15). Maintenance of sufficient intact (fully active) extracellular Lc1 may contribute to the actions of glucocorticoids.