This study examined the effects of dexamethasone treatment on basal hypothalamo-pitutary-adrenal (HPA) axis function and HPA responses to subsequent acute hypoxemia in the ovine fetus during late gestation. Between 117 and 120 days (term: ca. 145 days), 12 fetal sheep and their mothers were catheterized under halothane anesthesia. From 124 days, 6 fetuses were continuously infused I.V. with dexamethasone (1.80±0.15 µg.kg^-1.h^-1 in 0.9 % saline at 0.5 ml.h^-1) for 48 h, while the remaining 6 fetuses received saline at the same rate. Two days after infusion, when dexamethasone had cleared from the fetal circulation, acute hypoxemia was induced in both groups for 1 h by reducing maternal F_iO₂. Fetal dexamethasone treatment transiently lowered fetal basal plasma cortisol, but not ACTH, concentrations. However, 2 days after treatment, fetal basal plasma cortisol concentration was elevated without changes in basal ACTH concentration. Despite elevated basal plasma cortisol concentration, the ACTH response to acute hypoxemia was enhanced, and the increment in plasma cortisol levels maintained, in dexamethasone-treated fetuses. Correlation of fetal plasma ACTH and cortisol concentrations indicated enhanced cortisol output without a change in adrenocortical sensitivity. The enhancements in basal cortisol concentration and the HPA axis responses to acute hypoxemia following dexamethasone treatment were associated with reductions in pituitary and adrenal GR mRNA contents which persisted at 3-4 days after the end of treatment. These data show that prenatal glucocorticoids alter the basal set point of the HPA axis and enhance HPA axis responses to acute stress in the ovine fetus during late gestation.