In Balb 3T3 murine fibroblasts infected with retroviruses carrying the v-src oncogene, treatment with the glucocorticoid hormone dexamethasone induces a 10-fold increase in the number of transformed foci and of anchorage-independent colonies. In contrast, in NIH-3T3-infected cells the number of foci and of colonies growing in soft agar is considerably reduced by the addition of the hormone. The effect of dexamethasone on both Balb 3T3 and NIH 3T3 cells is dose-dependent and mediated by specific receptors. The expression of glucocorticoid receptors as well as transactivation of a mouse mammary tumor virus promoter in the presence of dexamethasone is comparable in the two cell lines. Dexamethasone does not change the expression and kinase activity of v-Src proteins either in freshly infected Balb 3T3 and NIH 3T3 cells or in morphologically normal clones or in transformed foci derived from infected Balb 3T3 cells stably expressing v-Src. However, in cocultivation assays of phenotypically normal clones of v-Src expressing Balb 3T3 cells mixed with a large excess of parental Balb 3T3 cells, the hormone is able to rescue the ability to form transformed foci of these otherwise normal cells. The present data point out a new role of glucocorticoid hormones in controlling transformation in a cell-specific manner through epigenetic mechanisms.