GLUT2 expression is strongly decreased in glucose-unresponsive pancreatic beta cells of diabetic rodents. This decreased expression is due to circulating factors distinct from insulin or glucose. Here we evaluated the effect of palmitic acid and the synthetic glucocorticoid dexamethasone on GLUT2 expression by in vitro cultured rat pancreatic islets. Palmitic acid induced a 40% decrease in GLUT2 mRNA levels with, however, no consistent effect on protein expression. Dexamethasone, in contrast, had no effect on GLUT2 mRNA, but decreased GLUT2 protein by about 65%. The effect of dexamethasone was more pronounced at high glucose concentrations and was inhibited by the glucocorticoid antagonist RU-486. Biosynthetic labeling experiments revealed that GLUT2 translation rate was only minimally affected by dexamethasone, but that its half-life was decreased by 50%, indicating that glucocorticoids activated a posttranslational degradation mechanism. This degradation mechanism was not affecting all membrane proteins, since the alpha subunit of the Na+/K+-ATPase was unaffected. Glucose-induced insulin secretion was strongly decreased by treatment with palmitic acid and/or dexamethasone. The insulin content was decreased ( approximately 55 percent) in the presence of palmitic acid, but increased ( approximately 180%) in the presence of dexamethasone. We conclude that a combination of elevated fatty acids and glucocorticoids can induce two common features observed in diabetic beta cells, decreased GLUT2 expression, and loss of glucose-induced insulin secretion.