The effect of dexamethasone on hepatoma growth and differentiation, as well as the production of alpha-fetoprotein (AFP) and albumin, was investigated. Treatment of rats with dexamethasone strongly reduced (by 83 to 98%) the serum levels of AFP in rats bearing Morris hepatomas 7777, 8994, 7288c , and 9618A2 . Reduced AFP levels were due in part to a large reduction in tumor load in dexamethasone-treated rats. Hepatoma weights, on the average, were reduced by 64 to 90% relative to controls, while a large bowel transplantable tumor was affected only slightly. Lower serum AFP levels in rats with hepatomas 7777, 8994, and 9618A2 also resulted from reduced AFP synthesis, as indicated by lower cytoplasmic AFP levels. Cytoplasmic albumin levels were higher in dexamethasone-treated rats bearing hepatomas 7777, 8994, and 7288c than they were in rats which did not receive dexamethasone. RNA dot hybridization also indicated that dexamethasone reduced the amount of AFP mRNA in hepatoma 7777 while increasing albumin mRNA. Two-dimensional gel electrophoresis of tumor cytosol proteins showed that dexamethasone reduced synthesis of all AFP variants which could be detected by this technique. A number of abundant hepatoma-associated and liver-associated proteins were not significantly affected by dexamethasone.