Corticosteroid treatment is an established therapy for preterm infants, and germline inactivation of the glucocorticoid receptor (GR) gene in the mouse leads to respiratory failure and postnatal lethality. Although glucocorticoids have been thought to critically act in epithelial cells inducing the functional maturation of the lung, inactivation of the GR gene exclusively in the epithelium of the developing murine lung did not impair survival. In contrast, mice lacking GR specifically in mesenchyme-derived cells displayed a phenotype strongly reminiscent of GR knockout animals and died immediately after birth. Detailed analysis of gene expression allows the conclusion that GR acts in cells of the fibroblast lineage controlling their proliferation rate and the composition of the extracellular matrix.