11beta-Hydroxysteroid dehydrogenase type 1 (11beta-HSD1) acts as a reductase in vivo, regenerating active glucocorticoids within cells from circulating inert 11-keto forms, thus amplifying local glucocorticoid action. 11beta-HSD1 is predominantly expressed in liver and also adipose tissue and brain. Mice deficient in 11beta-HSD1 (11beta-HSD1(-/-)) exhibit adrenal hyperplasia, raised basal corticosterone levels, and increased hypothalamic-pituitary-adrenal (HPA) axis responses to stress. Whereas reduced peripheral glucocorticoid regeneration may explain adrenal hypertrophy and exaggerated stress responses, elevated basal glucocorticoid levels support a role for 11beta-HSD1 within the brain in amplifying glucocorticoid feedback. To test this hypothesis, apolipoprotein E-HSD1 mice overexpressing 11beta-HSD1 in liver were intercrossed with 11beta-HSD1(-/-) mice to determine whether complementation of hepatic 11beta-HSD1 can restore adrenal and HPA defects. Transgene-mediated delivery of 11beta-HSD1 activity to the liver rescued adrenal hyperplasia and reversed exaggerated HPA stress responses in 11beta-HSD1(-/-) mice. Unexpectedly, elevated nadir plasma corticosterone levels were also restored to control levels. Consistent with this, CYP11B1 mRNA expression in the adrenal cortex of 11beta-HSD1(-/-) mice was increased by 50% but returned to control levels in 11beta-HSD1(-/-) mice bearing the apolipoprotein E-HSD1 transgene. 11beta-HSD1(-/-) mice have lower plasma glucose levels, but the fall in plasma corticosterone with sucrose supplementation was similar in 11beta-HSD1(-/-) and control mice, suggesting glucose deficiency is not the main mechanism whereby basal corticosterone levels are elevated in the null mice. Thus, regeneration of glucocorticoids by 11beta-HSD1 in the liver normalizes all aspects of HPA axis dysregulation in 11beta-HSD1(-/-) mice, without restoration of enzyme activity in key feedback areas of the forebrain. Therefore, hepatic glucocorticoid metabolism influences basal as well as stress-associated functions of the HPA axis.