At pharmacological concentrations, glucocorticoids (GCs) display potent anti-inflammatory effects, and are therefore frequently prescribed by physicians to treat a wide variety of diseases. Despite excellent efficacy, GC therapy is hampered by their notorious metabolic side effect profile. Chronic exposure to increased levels of circulating GCs is associated with central adiposity, dyslipidaemia, skeletal muscle wasting, insulin resistance, glucose intolerance and overt diabetes. Remarkably, many of these side-effects of GC treatment resemble the various components of the metabolic syndrome (MetS), in which indeed subtle disturbances in the hypothalamic-pituitary-adrenal (HPA) axis and/or increased tissue sensitivity to GCs have been reported. Recent developments have led to renewed interest in the mechanisms of GC's diabetogenic effects. First, 'selective dissociating glucocorticoid receptor (GR) ligands', which aim to segregate GC's anti-inflammatory and metabolic actions, are currently being developed. Second, at present, selective 11beta-hydroxysteroid dehydrogenase type 1 (11beta-HSD1) inhibitors, which may reduce local GC concentrations by inhibiting cortisone to cortisol conversion, are evaluated in clinical trials as a novel treatment modality for the MetS. In this review, we provide an update of the current knowledge on the mechanisms that underlie GC-induced dysmetabolic effects. In particular, recent progress in research into the role of GCs in the pathogenesis of insulin resistance and beta-cell dysfunction will be discussed.