In the lung, anti-inflammatory actions of glucocorticoids would be determined by 11beta-hydroxysteroid dehydrogenase type 2 (11beta-HSD2), the microsomal enzyme responsible for the breakdown of bio-active glucocorticoids. However, regulation of 11beta-HSD2 under inflammatory conditions such as acute lung injury is not well understood. In the present study, we examined whether inflammatory substances would influence the activity and mRNA expression of 11beta-HSD2 in the lung. In a human bronchial epithelial cell line BEAS-2B, endotoxin inhibited 11beta-HSD2 enzyme activity in a dose-dependent manner over 48 h with a significant decrease in the mRNA expression. Likewise, tumor necrosis factor (TNF)-alpha inhibited both activity and mRNA expression of 11beta-HSD2. The TNF-alpha-dependent decrease in the enzyme activity was completely blocked by anti-TNF-alpha antibody, while antibody alone showed no significant influence on the enzyme activity. An nitric oxide donor (NO) sodium nitropusside or a cGMP analog 8-br-cGMP caused moderate but significant decreases in both activity and mRNA expression of 11beta-HSD2. Importantly, treatment of rats with endotoxin significantly decreased both activity and mRNA expression of 11beta-HSD2 in the lung tissue. We conclude that lung inflammation reduces local glucocorticoid breakdown and augments glucocorticoid action in the lung by down-regulating 11beta-HSD2 via multiple mechanisms.