The evolution of glucocorticoid drugs was driven by the demand of lowering the unwanted side effects, while keeping the beneficial anti-inflammatory effects. Potency is an important aspect of this evolution as many undesirable side effects are associated with use of high-dose glucocorticoids. The side effects can be minimized by highly potent glucocorticoids that achieve the same treatment effects at lower doses. This demand propelled the continuous development of synthetic glucocorticoids with increased potencies, but the structural basis of their potencies is poorly understood. To determine the mechanisms underlying potency, we solved the X-ray structures of the glucocorticoid receptor (GR) ligand-binding domain (LBD) bound to its endogenous ligand, cortisol, which has relatively low potency, and a highly potent synthetic glucocorticoid, mometasone furoate (MF). The cortisol-bound GR LBD revealed that the flexibility of the C1-C2 single bond in the steroid A ring is primarily responsible for the low affinity of cortisol to GR. In contrast, we demonstrate that the very high potency of MF is achieved by its C-17α furoate group completely filling the ligand-binding pocket, thus providing additional anchor contacts for high-affinity binding. A single amino acid in the ligand-binding pocket, Q642, plays a discriminating role in ligand potency between MF and cortisol. Structure-based design led to synthesis of several novel glucocorticoids with much improved potency and efficacy. Together, these results reveal key structural mechanisms of glucocorticoid potency and provide a rational basis for developing novel highly potent glucocorticoids.