We have recently demonstrated an important function of keratinocyte growth factor (KGF) in morphogenesis of epithelium and wound re-epithelialization. Furthermore, abnormalities in KGF expression or responsiveness are associated with wound-healing defects. In this study we have analyzed the regulation of KGF expression during wound repair in glucocorticoid-treated mice that are characterized by severe wound healing abnormalities. Induction of KGF mRNA expression after skin injury was significantly reduced in these mice, whereas KGF receptor mRNA levels were only affected to a minor extent by glucocorticoid treatment. The reduced KGF expression during wound healing in steroid-treated animals is at least partially due to a direct effect of glucocorticoids on the KGF expressing mesenchymal cells, because treatment of cultured fibroblasts with dexamethasone reduced KGF mRNA levels in a time- and concentration-dependent manner. The inhibitory effect of glucocorticoids on KGF expression was compensated for by high levels of serum growth factors or pro-inflammatory cytokines, demonstrating that KGF expression is subject to positive and negative regulation. Thus it seems likely that a fine balance of various KGF-regulating factors is important for normal wound healing.