In analyzing the molecular mechanisms underlying glucocorticoid-induced apoptosis in neural cells, we observed that dexamethasone, by activating glucocorticoid receptors, causes arrest of HT-22 cells in the G1 phase of the cell cycle; upon withdrawal of the agonist, cells resume proliferation. Our investigations revealed that glucocorticoid treatment, although having no effects on endogenous p53 protein stability, induces rapid translocation of p53 to the nucleus and enhances its transcriptional activity. Consistently, transfection studies with p53-responsive promoters revealed a substantial stimulation of the trans-activation potential of exogenous p53 by dexamethasone. Cells arrested in G1 failed to show signs of apoptosis even after overexpression of p53. Although dexamethasone induced transcription of the proapoptotic gene bax, there was no increase of Bax protein levels. We conclude that glucocorticoid receptor-induced neural cell cycle arrest is associated with an increase in nuclear translocation and transcriptional activity of p53, and suggest that potentiation of p53 may serve as a brake on cell proliferation and may prime cells for differentiation or death induced by other signals.