Glucocorticoids (GCs) play a key role in skin homeostasis and stress responses acting through the GC receptor (GR), which modulates gene expression by DNA binding-dependent (transactivation) and -independent (transrepression) mechanisms. To delineate which mechanisms underlie the beneficial and adverse effects mediated by GR in epidermis and other epithelia, we have generated transgenic mice that express a mutant GR (P493R, A494S), which is defective for transactivation but retains transrepression activity, under control of the keratin 5 promoter (K5-GR-TR mice). K5-GR-TR embryos exhibited eyelid opening at birth and corneal defects that resulted in corneal opacity in the adulthood. Transgenic embryos developed normal skin, although epidermal atrophy and focal alopecia was detected in adult mice. GR-mediated transrepression was sufficient to inhibit keratinocyte proliferation induced by acute and chronic phorbol 12-myristate 13-acetate exposure, as demonstrated by morphometric analyses, bromodeoxyuridine incorporation, and repression of keratin 6, a marker of hyperproliferative epidermis. These antiproliferative effects were mediated through negative interference of GR with MAPK/activator protein-1 and nuclear factor-kappaB activities, although these interactions occurred with different kinetics. However, phorbol 12-myristate 13-acetate-induced inflammation was only partially inhibited by GR-TR, which efficiently repressed IL-1beta and MMP-3 genes while weakly repressing IL-6 and TNF-alpha. Our data highlight the relevance of deciphering the mechanisms underlying GR actions on epithelial morphogenesis as well as for its therapeutic use to identify more restricted targets of GC administration.