We used primary cultures of rat hepatocytes to evaluate the effects of glucocorticoids on insulin-responsive hepatic lipogenesis. The data indicate that hepatocytes incubated for 20 h with dexamethasone (0.1 microM) alone are profoundly resistant to the ability of insulin to stimulate lipogenesis acutely. In contrast, primary cultures of hepatocytes incubated with dexamethasone plus insulin are hyper-responsive to the ability of insulin to stimulate lipogenesis chronically. This potentiation of insulin action by a glucocorticoid occurs at physiological concentrations of the two hormones. Exposure to dexamethasone plus insulin for more than 4 h is required for the two hormones to enhance insulin action either by overcoming the insulin resistance induced by dexamethasone alone or by stimulating insulin action induced by insulin alone. Despite the marked potentiation of insulin action, hepatocytes exposed to dexamethasone plus insulin are less sensitive to insulin, as demonstrated by a shift to the right in the dose-response curve for insulin-stimulated lipogenesis. The resistance of hepatocytes to the acute effects of insulin after exposure to dexamethasone alone and the potentiation of insulin action and decreased sensitivity to insulin after exposure to insulin plus dexamethasone are all mediated by post-insulin-binding events. These studies demonstrate potentiation of insulin action in the liver by physiological concentrations of glucocorticoids and may have physiological significance for the regulation of normal hepatic lipogenesis, for the hyperlipidaemia observed with the pharmacological use of glucocorticoids, and for disease states in man associated with hyperinsulinaemia and hypercortisolism.