Glucocorticoids are involved in numerous physiological processes. Most of their effects are mediated by the glucocorticoid receptor (GR) via activation and repression of gene expression. Whereas activation requires DNA binding of the receptor, repression is usually mediated by protein-protein interactions with other transcription factors. To decipher the molecular mode of action of GR, mice were generated by gene targeting, carrying a point mutation in one of the dimerization domains, thus abrogating DNA binding by GR. These GRdim mice survive to adulthood and thereby allowed analysis of the mechanism used by GR in the control of physiological processes. Specifically, stress erythropoiesis was found to require the DNA binding-dependent function of GR whereas the antitumor-promoting activity of GR in skin is mediated by interaction with the transcription factor AP-1. Furthermore, the immunosuppressive and anti-inflammatory activity of glucocorticoids is largely independent of GR DNA-binding, suggesting that GRdim mice might be useful in the future for the search of steroidal anti-inflammatory drugs with reduced side-effects.