Mice in which exon 2 of the glucocorticoid receptor (GR) has been disrupted [GR exon 2 knockout (GR2KO)] have been used as a model to study the requirement for this receptor in a number of biological systems. A recent report showed that these mice actually express a truncated ligand-binding GR fragment, prompting us to ask whether this mutation truly results in a glucocorticoid-insensitive phenotype. Based on cDNA microarray analysis of fetal thymocytes, we found that glucocorticoids were able to enhance or repress activation-induced gene expression in GR2KO and wild-type thymocytes to a similar degree. Moreover, although changes in gene expression induced by glucocorticoids alone were blunted, the expression of a substantial number of genes in GR2KO thymocytes was modulated by stimulation with glucocorticoids. Among these genes, as confirmed by quantitative real-time PCR, was the classic glucocorticoid-responsive gene glutamine synthetase as well as genes implicated in T cell development and function such as IL-7 receptor alpha-chain and glucocorticoid-induced leucine zipper (GIL2). Thus, the truncated C-terminal GR2KO product, which lacks the major transactivation domain, retains, to a large extent, the ability to regulate gene expression both positively and negatively in a ligand-responsive manner when expressed in vivo.