Glucocorticoids (GCs) have a long history of use as therapeutic agents for numerous skin diseases. Surprisingly, their specific molecular effects are largely unknown. To characterize GC action in epidermis, we compared the transcriptional profiles of primary human keratinocytes untreated and treated with dexamethasone (DEX) for 1, 4, 24, 48, and 72 h using large scale microarray analyses. The majority of genes were found to be regulated only after 24 h and remained regulated throughout treatment. In addition to regulation of the expected pro-inflammatory genes, we found that GCs regulate cell fate, tissue remodeling, cell motility, differentiation, and metabolism. GCs suppress the expression of essentially all IFNgamma-regulated genes, including IFNgamma receptor and STAT-1, an effect that was previously unknown. GCs also block STAT-1 activation and nuclear translocation. Unexpectedly, GCs induce the expression of anti-apoptotic genes and repress pro-apoptotic ones, preventing UV-induced keratinocyte apoptosis. Consequently, treatment with GCs blocked UV-induced apoptosis of keratinocytes. GCs have profound effect on wound healing by inhibiting cell motility and the expression of the proangiogenic factor, vascular endothelial growth factor. They play an important role in tissue remodeling and scar formation by suppressing the expression of TGFbeta1 and -2 and MMP1, -2, -9, and -10 and inducing TIMP-2. Finally, GCs promote terminal epidermal differentiation while simultaneously inhibiting early stage differentiation. These results provide new insights into the beneficial and adverse effects of GCs in the epidermis, defining the participating genes and mechanisms that coordinate the cellular responses important for GC-based therapies.