The relationship between glucocorticoid secretion from the adrenal gland and gonadal function has previously been attributed to central inhibition by the adrenal steroids of pituitary gonadotropin output. This review focuses on the direct actions of glucocorticoids within the gonads, including positive effects on germ cell maturation and both positive and negative effects on the stimulation of gonadal steroidogenesis by LH and FSH. In addition, we address the role in the gonads of 11 beta-hydroxysteroid dehydrogenase (11 beta HSD), which interconverts the glucocorticoids with their inactive 11-ketosteroid derivatives. To date, two isoforms of 11 beta HSD have been described. 11 beta HSD1, purified and cloned from the liver, has a relatively low affinity for glucocorticoids and acts instead as an 11-oxoreductase, whereas the high affinity 11 beta HSD2, first identified in the kidney, acts as an efficient 11 beta-dehydrogenase to inactivate physiological concentrations of glucocorticoid. We propose that in the gonads, 11 beta HSD1 promotes the positive effects of glucocorticoids on germ cell maturation (by increasing the local concentration of active glucocorticoids), whereas a high affinity 11 beta-dehydrogenase activity, consistent with that of 11 beta HSD5 inactivates glucocorticoids and so protects luteal cells from the inhibitory effects of these steroids during the luteal phase of the ovarian cycle.