Hypohidrotic ectodermal dysplasia is a human syndrome defined by maldevelopment of one or more ectodermal-derived tissues, including the epidermis and cutaneous appendices, teeth, and exocrine glands. The molecular bases of this pathology converge in a dysfunction of the transcription factor nuclear factor of the kappa-enhancer in B cells (NF-kappaB), which is essential to epithelial homeostasis and development. A number of mouse models bearing disruptions in NF-kappaB signaling have been reported to manifest defects in ectodermal derivatives. In ectoderm-targeted transgenic mice overexpressing the glucocorticoid receptor (GR) [keratin 5 (K5)-GR mice], the NF-kappaB activity is greatly decreased due to functional antagonism between GR and NF-kappaB. Here, we report that K5-GR mice exhibit multiple epithelial defects in hair follicle, tooth, and palate development. Additionally, these mice lack Meibomian glands and display underdeveloped sweat and preputial glands. These phenotypic features appear to be mediated specifically by ligand-activated GR because the synthetic analog dexamethasone induced similar defects in epithelial morphogenesis, including odontogenesis, in wild-type mice. We have focused on tooth development in K5-GR mice and found that an inhibitor of steroid synthesis partially reversed the abnormal phenotype. Immunostaining revealed reduced expression of the inhibitor of kappaB kinase subunits, IKKalpha and IKKgamma, and diminished p65 protein levels in K5-GR embryonic tooth, resulting in a significantly reduced kappaB-binding activity. Remarkably, altered NF-kappaB activity elicited by GR overexpression correlated with a dramatic decrease in the protein levels of DeltaNp63 in tooth epithelia without affecting Akt, BMP4, or Foxo3a. Given that many of the 170 clinically distinct ectodermal dysplasia syndromes still remain without cognate genes, deciphering the molecular mechanisms of this mouse model with epithelial NF-kappaB and p63 dysfunction may provide important clues to understanding the basis of other ectodermal dysplasia syndromes.