Glucocorticoid hormones stimulate adherens junction and tight junction formation in Con8 mammary epithelial tumor cells and induce the production of a stable nonphosphorylated beta-catenin protein localized exclusively to the cell periphery. Glycogen synthase kinase-3 (GSK3) phosphorylation of beta-catenin is known to trigger the degradation of this adherens junction protein, suggesting that steroid-activated cascades may be targeting this protein kinase. We now demonstrate that treatment with the synthetic glucocorticoid dexamethasone induces the ubiquitin-26S proteasome-mediated degradation of GSK3 protein with no change in GSK3 transcript levels. In transfected cells, deletion of the N-terminal nine amino acids or mutation of the serine-9 phosphorylation site on GSK3-beta prevented its glucocorticoid-induced degradation. Expression of stabilized GSK3 mutant proteins ablated the glucocorticoid-induced tight junction sealing and resulted in production of a nonphosphorylated beta-catenin that localizes to both the nucleus and the cell periphery in steroid-treated cells. Serine-9 on GSK3 can be phosphorylated by Sgk (serum- and glucocorticoid-induced protein kinase) and by Akt. Expression of dominant-negative forms of either Sgk- or Akt-inhibited glucocorticoid induced GSK3 ubiquitination and degradation and disrupted the dexamethasone-induced effects on beta-catenin dynamics. Furthermore, the steroid-induced tight junction sealing is attenuated in cells expressing dominant-negative forms of either Sgk or Akt, although the effect of blunting Sgk signaling was significantly greater. Taken together, we have uncovered a new cellular cascade in which Sgk and Akt trigger the glucocorticoid-regulated phosphorylation, ubiquitination, and degradation of GSK3, which alters beta-catenin dynamics, leading to the formation of adherens junctions and tight junction sealing.