The basis for the glucocorticoid-mediated decrease in tissue collagen was studied in mouse granulomas and in primary granuloma fibroblast cultures. Injection of mice for 12 days with dexamethasone (0.35 mg/kg body weight) resulted in a 50--70% inhibition of collagen synthesis and accumulation in polyvinyl sponge-induced granulomas whereas total protein synthesis was inhibited by only about 25%. The decreased collagen content of the granuloma was accounted for by both a reduced fibroblast number and diminished synthesis per cell. Growth rates, total protein synthesis and collagen synthesis were the same in granuloma fibroblast cultures derived from control or steroid-treated mice. However, addition of 3.10(-7) M hydrocortisone to the culture medium caused a 30--50% inhibition of both collagen and non-collagen protein synthesis in firbroblasts from either source. These inhibitory effects were dose- and time-dependent with a lag time of 12--24 h. Prolyl hydroxylase activity was reduced both in sponge granulomas from glucocorticoid-treated mice and in hydrocortisone-treated fibroblast cultures. However, protein synthesis was inhibited to the same extent as the inhibition of prolyl hydroxylase activity and there was no effect on peptidyl prolyl hydroxylation. These results indicate that the glucocorticoid-induced reduction of collagen synthesis and accumulation observed in mouse granulomas and primary granuloma fibroblast cultures is not specific for this protein. Furthermore, glucocorticoid-induced inhibition of collagen synthesis cannot be attributed to underhydroxylation of collagen prolyl residues.