The present study investigated the effect of prenatal dexamethasone (Dex) exposure on early perinatal events, hippocampal function, and response to stress. Pregnant rats received Dex in the evening water (2.5 microg/ml) or tap water (Veh) from gestational day 15 until delivery. On the day of parturition, pups were randomized, cross-fostered, and reduced to eight or nine per dam. Four groups resulted: Veh-Veh (offspring exposed to Veh in utero, rearing mother treated with Veh during gestation), Veh-Dex, Dex-Veh, and Dex-Dex. Spatial visual memory was evaluated with the Morris water maze. The corticosterone response to restraint stress was examined, and the expression of hippocampal glucocorticoid and mineralocorticoid receptors mRNA was determined by in situ hybridization. Exposure to Dex caused restlessness in mothers, low birth weights, and poor weight gain in the offspring. The Dex-Dex males had impaired spatial learning, inability to rapidly terminate the adrenocortical response to stress, and decreased hippocampal glucocorticoid receptor (GR) mRNA expression. In contrast, Dex-exposed animals reared by Veh-treated mothers had adequate spatial learning, enhanced glucocorticoid feedback, and increased hippocampal GR mRNA. We conclude that the environment provided by a healthy mother during the postnatal period can prevent the detrimental effects of prenatal Dex administration on cognition, GR mRNA expression of the hippocampus, and the quality of the stress response.