Lineage commitment and differentiation of mesenchymal stromal cells (MSCs) into osteoblasts in vitro is enhanced by a potent synthetic form of glucocorticoid (GC), dexamethasone (Dex). Paradoxically, when used chronically in patients, GCs exert negative effects on bone, a phenomenon known as glucocorticoid-induced osteoporosis in clinical practice. The mechanism on how GC differentially affects bone precursor cells to become mature osteoblasts during osteogenesis remains elusive. In this study, the dose and temporal regulation of Dex on MSC differentiation into osteoblasts were investigated. We found that continuous Dex treatment led to a net reduction of the maturation potential of differentiating osteoblasts. This phenomenon correlated with a decrease in glucocorticoid receptor (GR) expression, hastened degradation, and impaired sub cellular localization. Similarly, Histone Deacetylase 6 (HDAC6) expression was found to be regulated by Dex, co-localized with GR and this GR-HDAC6 complex occupied the promoter region of the osteoblast late marker osteocalcin (OCN). Combinatorial inhibition of HDAC6 and GR enhanced OCN expression. Together, the cross-talk between the Dex effector molecule GR and the inhibitory molecule HDAC6 provided mechanistic explanation of the bimodal effect of Dex during osteogenic differentiation of MSCs. These findings may provide new directions of research to combat glucocorticoid-induced osteoporosis.