Glucocorticosteroids (GCS) are prerequisite for the induction of surfactant synthesis in the fetal lung. The 11 beta-hydroxysteroid dehydrogenase (11 beta-HSD) regulates the intracellular concentration of biologically active GCS. In this study we demonstrate the correlation of 11 beta-HSD activity and the GCS-induced surfactant phosphatidylcholine synthesis in organoid cultures of fetal rat lung. In the first series of experiments, [H-3]corticosterone (CORT) or [H-3]11-dehydrocorticosterone (11-DHC) were added to lung organoid cultures to test 11 beta-HSD activity. We found a low oxidative and a high reductive conversion indicating that in intact cells the equilibrium tends to biologically active GCS. However, in homogenized organoid cultures oxidative outweighed reductive activity. Secondly, the phosphatidylcholine synthesis of organoid cultures was enhanced by preincubation with GCS. CORT, as well as the hormonally inactive 11-DHC, increased the incorporation of [C-14]choline into phosphatidylcholine. The effect of the latter was completely inhibited by glycyrrhetinic acid (inhibitor of 11 beta-HSD) indicating that it is caused by a previous conversion of 11-DHC into CORT via 11 beta-HSD. Thirdly, preincubation with GCS also altered 11 beta-HSD activity: dexamethasone or CORT both decreased the oxidative and increased the reductive activity in intact cells, indicating that glucocorticoids increase the rate of their own activation by positive feedback.