Glucocorticoid excess leads to bone loss, primarily by decreasing bone formation. However, a variety of in vitro models show that glucocorticoids can promote osteogenesis. To elucidate the role of endogenous glucocorticoids in bone metabolism, we developed transgenic (TG) mice in which a 2.3-kb Col1a1 promoter fragment drives 11beta-hydroxysteroid dehydrogenase type 2 (11beta-HSD2) expression in mature osteoblasts. 11beta-HSD2 should metabolically inactivate endogenous glucocorticoids in the targeted cells, thereby reducing glucocorticoid signaling. The inhibitory effect of 300 nm hydrocortisone on percent collagen synthesis was blunted in TG calvariae, demonstrating that the transgene was active. Collagen synthesis rates were lower in TG calvarial organ cultures compared with wild-type. Trabecular bone parameters measured by microcomputed tomography were reduced in L3 vertebrae, but not femurs, of 7- and 24-wk-old TG females. These changes were also not seen in males. In addition, histomorphometry showed that osteoid surface was increased in TG female vertebrae, suggesting that mineralization may be impaired. Our data demonstrate that endogenous glucocorticoid signaling is required for normal vertebral trabecular bone volume and architecture in female mice.