1. As arginase by limiting nitric oxide (NO) synthesis may play a role in airway hyperresponsiveness and glucocorticoids are known to induce the expression of arginase I in hepatic cells, glucocorticoid effects on arginase in alveolar macrophages (AM Phi) were studied. 2. Rat AM Phi were cultured in absence or presence of test substances. Thereafter, nitrite accumulation, arginase activity, and the expression pattern of inducible NO synthase, arginase I and II mRNA (RT - PCR) and proteins (immunoblotting) were determined. 3. Lipopolyssacharides (LPS, 20 h) caused an about 2 fold increase in arginase activity, whereas interferon-gamma (IFN-gamma), like LPS a strong inducer of NO synthesis, had no effect. 4. Dexamethasone decreased arginase activity by about 25% and prevented the LPS-induced increase. Mifepristone (RU-486) as partial glucocorticoid receptor agonist inhibited LPS-induced increase by 45% and antagonized the inhibitory effect of dexamethasone. 5. Two different inhibitors of the NF-kappa B-pathway also prevented LPS-induced increase in arginase activity. 6. Rat AM Phi expressed mRNA and protein of arginase I and II, but arginase I expression was stronger. Arginase I mRNA and protein was not affected by IFN-gamma, but increased by LPS and this effect was prevented by dexamethasone. Both, LPS and IFN-gamma enhanced the levels of arginase II mRNA and protein, effects also inhibited by dexamethasone. As IFN-gamma did not affect total arginase activity, arginase II may represent only a minor fraction of total arginase activity. 7. In rat AM Phi glucocorticoids inhibit LPS-induced up-regulation of arginase activity, an effect which may contribute to the beneficial effects of glucocorticoids in the treatment of inflammatory airway diseases.