Previous studies have shown that treatment of human myeloid leukemia cells with 12-O-tetradecanoylphorbol-13-acetate (TPA) is associated with induction of monocytic differentiation and expression of the c-jun and c-fos early response genes. The present work demonstrates that the glucocorticoid dexamethasone inhibits TPA-induced increases in c-jun and c-fos mRNA levels in U-937 leukemia cells. These findings were associated with a block in appearance of the monocytic phenotype, including inhibition of TPA-induced increases in lamin A, lamin C, and vimentin transcripts. Other studies have demonstrated that TPA-induced monocytic differentiation and expression of the c-jun and c-fos genes in myeloid leukemia cells are regulated by protein kinase C (PKC). The finding that dexamethasone has no effect on TPA-induced activation of PKC suggests that this glucocorticoid inhibits signals downstream or parallel to this enzyme. Nuclear run-on assays demonstrate that: (1) induction of c-jun and c-fos expression by TPA is regulated by transcriptional mechanisms, (2) TPA-induced expression of c-jun and c-fos does not require protein synthesis, and (3) TPA-induced expression of both genes is inhibited at the transcriptional level by dexamethasone. To further define the effects of dexamethasone at the molecular level, we prepared a series of deleted c-jun promoter fragments linked to the chloramphenicol acetyltransferase (CAT) gene. Increases in CAT activity during transient expression of these constructs in TPA-treated U-937 cells could be assigned to the region (-97 to -20) of the promoter that contains the AP-1 binding site. This induction of CAT activity was sensitive to dexamethasone. These findings suggest that dexamethasone down-regulates TPA-induced transcription of the c-jun gene during monocytic differentiation by inhibiting activation of the AP-1 site.