Glucocorticoids are highly effective in the treatment of allergy and asthma and inhibit the synthesis of IL‐4, IL‐5 and IL‐13 by disease‐promoting CD4⁺ Th2 cells. CD8⁺ T cells also synthesize these cytokines, and the aim of this study was to investigate how glucocorticoids effect cytokine production by these cells. When CD8⁺ T cells are stimulated with anti‐CD3 and IL‐2 plus IL‐4 or dexamethasone, production of the anti‐inflammatory cytokine IL‐10 is low in both primary and secondary cultures restimulated with anti‐CD3 and IL‐2 alone. However, when both are present, a synergistic effect on IL‐10 synthesis is observed. The additional presence of antigen‐presenting cells (APC) in the priming culture maintains IL‐10 levels, but inhibits IL‐4 and IL‐5 production. CD4⁺ T cells develop a similar glucocorticoid‐induced phenotype. These cells demonstrate regulatory activity and inhibit CD4⁺ T cell activation in an IL‐10‐dependent manner. Earlier reports show glucocorticoids promote a Th2 phenotype by effects on purified naive T cells or pretreatment of APC. This study demonstrates, more critically, that when APC are present, glucocorticoids induce CD4 and CD8 T cell populations synthesizing high levels of IL‐10, but greatly reduced amounts of disease‐promoting IL‐4 and IL‐5.