One subset of neural crest cells, the sympathoadrenal precursors, undergoes a switch in phenotype expression, when they invade the adrenal anlagen and become associated with adrenocortical cells. To investigate the mechanisms responsible for the conversion of noradrenaline synthesizing precursors to adrenaline producing endocrine chromaffin cells we studied the role of glucocorticoids on the initial induction of adrenaline synthesis in embryonic adrenals and cultures of highly purified chromaffin precursor cells. We could show that in vivo differentiation of rat chromaffin precursors commences between 16.3 and 17.3 days of gestation. While adrenaline and the activity of the enzyme phenylethanolamine N-methyltransferase (PNMT), which converts noradrenaline to adrenaline, were present at Embryonic Day 17.3 (E17.3), they were not detectable in E16.3 adrenals. Small amounts of corticosterone were present in E16.3 adrenals and plasma, but in parallel with the initial induction of adrenaline biosynthesis, a sharp rise in organ and plasma glucocorticoid levels occurred until E17.3. Chromaffin precursor cells, isolated at E16.3 and cultured for 4 days, failed to express PNMT activity and adrenaline. However, 0.1 nM dexamethasone was already sufficient for the initial induction of adrenaline and its synthesizing enzyme. Specific glucocorticoid binding of freshly isolated chromaffin (precursor) cells revealed a developmental increase during embryogenesis, yet no glucocorticoid binding sites were detectable in chromaffin precursor cells at E16.3. They appeared at E17.3 in parallel with the initial induction of adrenaline biosynthesis and the enormous rise of adrenal and plasma corticosterone levels. We therefore conclude that glucocorticoids are essential and sufficient to trigger the differentiation of noradrenergic sympathoadrenal precursors to adrenergic chromaffin cells after a functional glucocorticoid receptor system has been established.