We tested the hypothesis that acute pre-natal exposure to high levels of synthetic glucocorticoid (betamethasone) would alter fetal testicular development through actions on gonadal glucocorticoid receptors (GRs). Pregnant Merino ewes bearing singleton male fetuses (n = 24) were allocated randomly among four equal groups to be injected intramuscularly with saline or betamethasone (0.5 mg/kg) either on day 109 of gestation or on both day 109 and day 116 of gestation. Fetal testes were collected at post-mortem, 5 days after each treatment. The volume of interstitial tissue and the volume, length and diameter of the sex cords were measured, and Sertoli cells and gonocytes were counted. For cord volume and interstitial tissue volume, control testes demonstrated maturational changes as fetal age advanced from 109 to 116 days of gestation. For that period, the single injection of betamethasone significantly reduced Leydig cell proliferation (P < 0.05), but had no effect on Sertoli cell numbers. Immunohistochemistry was used to localize GR and proliferating cell nuclear antigen in testicular cells. GR immunoexpression in Leydig cells was higher in fetuses exposed to betamethasone at 109 days of gestation than in control fetuses. Sertoli cells showed low levels of GR. It was concluded that, during mid-gestation, a brief period of glucocorticoid treatment could affect testicular development in male sheep fetuses. The mechanism probably involves direct effects on Leydig cells, as these cells express extra-GR in response to the treatment. Sertoli cells seem to produce less GR than Leydig cells, perhaps explaining their lack of response to betamethasone. These outcomes may have important implications for future fertility in male offspring.