In the late-gestation sheep, increased fetal plasma cortisol concentration and placental oestradiol (E(2)) output contribute to fetal organ maturation, in addition to the onset of parturition. Both cortisol and E(2) are believed to regulate the enzyme 11beta-hydroxysteroid dehydrogenase type 1 (11beta-HSD1), which interconverts bioactive 11-hydroxy glucocorticoids and their inactive 11-keto metabolites. 11beta-HSD1, abundantly expressed in fetal liver, operates primarily as a reductase enzyme to produce bioactive cortisol and thus regulates local hepatic glucocorticoid concentrations. Cortisol acts through the glucocorticoid receptor (GR) present in the liver. In this study, we examined the effects of cortisol and E(2) on hepatic 11beta-HSD1 and GR in the liver of chronically catheterized sheep fetuses treated with saline (n=5), cortisol (1.35 mg/h; n=5), saline+4-hydroxyandrostendione, a P450 aromatase inhibitor (4-OHA; 1.44 mg/h; n=5), or cortisol+4-OHA (n=5). Cortisol infusion resulted in increased plasma concentrations of fetal cortisol and E(2); concurrent administration of 4-OHA attenuated the increase in plasma E(2) concentrations. Using immunohistochemistry, we showed that fetal hepatocytes expressed both 11beta-HSD1 and GR proteins. Cortisol treatment increased GR in both cytosol and nuclei of hepatocytes; concurrent administration of 4-OHA was associated with distinct nuclear GR staining. Western blot revealed that cortisol, in the absence of increased E(2) concentrations, significantly increased concentrations of 11beta-HSD1 (34 kDa) and GR (95 kDa) proteins. 11beta-HSD1 enzyme activity was measured in the liver microsomal fraction in the presence of [(3)H]cortisone (10(-)(6) M) or [(3)H]cortisol (10(-)(6) M) and NADPH (reductase activity) or NADP(+) (dehydrogenase activity) respectively. 11beta-HSD1 reductase activity was significantly greater in the presence of cortisol. In summary, we found that, in sheep during late gestation, cortisol increased both 11beta-HSD1 and GR in the fetal liver, and these effects were accentuated in the absence of increased E(2).