Glucocorticoids play important roles in cell growth and differentiation. In this study, we investigated the effect of application of dexamethasone (DEX) at the early stage of chondrogenesis using the prechondrogenic cell line, ATDC5, which differentiates into chondrocytes in the presence of insulin. When ATDC5 cells were cultured in the presence of DEX and insulin, DEX inhibited insulin-induced cellular condensation and subsequent cartilaginous nodule formation, and reduced proteoglycan synthesis and type II collagen expression dose-dependently. Pretreatment with 10(-8) M DEX for 1 day inhibited insulin-induced Akt phosphorylation, but not ERK1/2 phosphorylation, in ATDC5 cells. Treatment of ATDC5 cells with insulin for more than 2 days upregulated the levels of phosphatidylinositol 3-kinase (PI3K) subunit proteins, p85 and p110, and Akt, whereas the upregulation was inhibited in the presence of 10(-8) M DEX. In electrophoresis mobility shift assays (EMSAs), treatment with 10(-8) M DEX inhibited DNA binding of Runx2 during culture of ATDC5 cells with insulin. Reporter assays using osteocalcin promoter showed that DEX inhibited Runx2-dependent transcription dose-dependently. Adenoviral introduction of dominant-negative (dn)-Akt or dn-Runx2 into ATDC5 cells inhibited cellular condensation and reduced proteoglycan synthesis upon incubation with insulin, whereas adenoviral introduction of Akt or Runx2 prevented the inhibition of chondrogenesis by DEX. These findings indicate that DEX inhibits chondrogenesis of ATDC5 cells at the early stage by downregulating Akt phosphorylation as well as the protein levels of PI3K subunits and Akt, thereby suppressing PI3K-Akt signaling, and by inhibiting DNA binding of Runx2 and Runx2-dependent transcription.