Downregulation of the renal glucocorticoid-metabolizing enzyme 11beta-hydroxysteroid dehydrogenase type 2 (11beta-HSD-2) during liver cirrhosis may allow activation of the mineralocorticoid receptor (MR) by glucocorticoids and contribute to sodium retention. We tested this hypothesis in male Wistar rats with decompensated liver cirrhosis and ascites 7 wk after bile duct ligation (BDL). Renal 11beta-HSD-2 mRNA, protein, and activity were significantly decreased in decompensated rats. The urinary Na(+)/K(+) ratio was reduced by 40%. Renal epithelial sodium channel (ENaC) mRNA and immunostaining were only slightly affected. Complete metabolic studies, including fecal excretion, showed that the BDL rats had avid renal sodium retention. Treatment of the BDL rats with dexamethasone suppressed endogenous glucocorticoid production, normalized total sodium balance and renal sodium excretion, and reduced ascites formation to the same degree as direct inhibition of MR with K-canrenoate. Total potassium balance was negative in the BDL rats, whereas renal potassium excretion was unchanged. In the distal colon, expression of ENaC was increased in BDL rats. Fecal potassium excretion was increased in cirrhotic rats, and this was corrected by treatment with K-canrenoate but not dexamethasone. We conclude that development of sodium retention and decompensation in cirrhotic rats is associated with downregulation of renal 11beta-HSD-2 activity and inappropriate activation of renal sodium reabsorption by endogenous glucocorticoids. In addition, the overall potassium loss in the BDL model is due to increased fecal potassium excretion, which is associated with upregulation of ENaC in distal colon.