The stimulative effect of glucocorticoids on intestinal salt and water absorption has been known for more than two decades. However, molecular mechanisms underlying this activation remain elusive. Previous studies showed that methylprednisolone specifically increased Na(+)/H(+) exchanger isoform (NHE) 3 mRNA in ileum and kidney without affecting NHE1 mRNA levels. These results suggest that glucocorticoids activate NHE3 activity by induction of NHE3 transcripts. We recently found in PS120 and opossum kidney cells that chronic incubation with dexamethasone activated NHE3 independent of gene induction, indicating that the transcriptional activation may not be the only determining factor in the NHE3 activation. Furthermore, dexamethasone activated NHE3 activity only in the presence of a NHE3 regulatory protein, NHERF2, which was previously shown to confer cAMP-dependent inhibition of NHE3. This activation of NHE3 could not be duplicated by NHERF1. We identified serum- and glucocorticoid-induced protein kinase, SGK1, as the protein interacting with PDZ domains of NHERF2 to regulate NHE3 activity. The expression of SGK1 enhanced NHE3 transport in PS120 fibroblasts. In addition, the "kinase-dead" SGK1 blocked activation of NHE3 by dexamethasone in opossum kidney cells. These data demonstrated that glucocorticoid activation of NHE3 requires the activation of SGK1 and the presence of NHERF2 acting as a scaffold protein.