We examined the effects of glucocorticoids and thyroid hormone (T3) on fatty acid synthesis, fatty acid composition and fatty acid synthetase activity in explants of human fetal lung (16-23 wk gestation). Explants were cultured 1-7 days in the absence (control) or presence of dexamethasone (10 nM) and/or T3 (2 nM). In control explants fatty acid synthesis and fatty acid synthetase activity increased 200% and 455%, respectively, between 1 and 5 days. Dexamethasone (10 nM) stimulated fatty acid synthesis (tritiated water incorporation) 155% and fatty acid synthetase activity 117% after 5 days in culture. T3 (2 nM) was not stimulatory, either alone or in the presence of dexamethasone. Dexamethasone increased the proportion of newly synthesized fatty acid recovered in phosphatidylcholine from 72% (control) to 90% (P less than 0.02) of total fatty acid. Dexamethasone stimulation of fatty acid synthetase activity was consistent with a receptor-mediated process: (1) stimulation was saturable and dose-dependent (Kd = 1.5 +/- 0.3 nM); (2) the potency of glucocorticoid analogs and other steroids reflected their glucocorticoid activity; (3) stimulation was reversible when cortisol was removed from the medium. Stimulation by dexamethasone was apparent within 24 h of hormone exposure, and increased to a maximum between 4 and 6 days. Fatty acid synthetase activity was higher in Type II cells (3.54 +/- 0.58 nmol malate/min per mg protein) than in fibroblasts from treated explants. Although both cell types responded to hormone treatment the stimulation was greater for Type II cells (200% vs. 75% increase). The fatty acid composition of PC showed increases in 14:0 and 16:1 with culture alone which were further stimulated by dexamethasone but not T3. These results indicate glucocorticoid stimulation of fatty acid synthesis and are consistent with a key role for fatty acid synthetase in the hormonal induction of pulmonary surfactant phosphatidylcholine synthesis in cultured fetal lung.