Steroid sulfatase (STS) converts sulfated steroids into active forms in cells. Preosteoblastic cells possess STS, but its role and regulation in bone are unclear. We examined STS activity and gene expression during differentiation of human MG-63 preosteoblasts. STS activity and gene expression were decreased during differentiation in cells treated with osteogenic supplement containing dexamethasone (DEX). DEX also inhibited STS activity and expression in undifferentiated cells, and the glucocorticoid antagonist RU486 reversed DEX inhibition of STS. These data may have implications for glucocorticoid-induced osteoporosis. The NFκB activators lipopolysaccharide and phorbol myristate acetate increased STS expression in undifferentiated and differentiated MG-63 cells, while the NFκB inhibitor BAY-11-7082 partially blocked these responses. The antagonistic actions of glucocorticoids and NFkB on STS expression are similar to the regulation of inflammatory response proteins. We propose a model of STS regulation whereby inflammation leads to increased STS, resulting in increased estrogen, which modulates the inflammatory response.