We examined the effects of corticosteroids on IL-12 production by human monocytes and on cytokine synthesis in T cells. To distinguish the effects of corticosteroids on the APC used to activate the T cell from direct effects of corticosteroids on the T cell, experiments were performed by exposing the APC and not the T cell to corticosteroids. We found that corticosteroids significantly inhibited the production in monocytes of IL-12, a cytokine that is extremely potent in enhancing IFN-gamma and inhibiting IL-4 synthesis in T cells. We demonstrated that reduced production of IL-12 in corticosteroid-treated monocytes resulted in a decreased capacity of the monocytes to induce IFN-gamma and an increased ability to induce IL-4 in T cells. These results suggest that although corticosteroids may be beneficial for the treatment of asthma or allergic disease due to direct inhibitory effects of corticosteroids on cytokine synthesis in T cells, chronic corticosteroid therapy may indirectly exacerbate the long-term course of allergic disease. This deleterious effect of corticosteroids would result from a limitation in IL-12 production in tissue monocytes and macrophages, which would enhance production of Th2 cytokines (which augment allergic disease), and would reduce production of Th1 cytokines (which attenuate allergic disease) in T cells that subsequently infiltrate the tissues.