Stress, the physiological reaction to a stressor, is initiated in teleost fish by hormone cascades along the hypothalamus-pituitary-interrenal (HPI) axis. Cortisol is the major stress hormone and contributes to the appropriate stress response by regulating gene expression after binding to the glucocorticoid receptor. Cortisol is inactivated when 11β-hydroxysteroid dehydrogenase (HSD) type 2 catalyzes its oxidation to cortisone. In zebrafish, Danio rerio, cortisone can be further reduced to 20β-hydroxycortisone. This reaction is catalyzed by 20β-HSD type 2, recently discovered by us. Here, we substantiate the hypothesis that 20β-HSD type 2 is involved in cortisol catabolism and stress response. We found that hsd11b2 and hsd20b2 transcripts were up-regulated upon cortisol treatment. Moreover, a cortisol-independent, short-term physical stressor led to the up-regulation of hsd11b2 and hsd20b2 along with several HPI axis genes. The morpholino-induced knock down of hsd20b2 in zebrafish embryos revealed no developmental phenotype under normal culture conditions, but prominent effects were observed after a cortisol challenge. Reporter gene experiments demonstrated that 20β-hydroxycortisone was not a physiological ligand for the zebrafish glucocorticoid or mineralocorticoid receptor but was excreted into the fish holding water. Our experiments show that 20β-HSD type 2, together with 11β-HSD type 2, represents a short pathway in zebrafish to rapidly inactivate and excrete cortisol. Therefore, 20β-HSD type 2 is an important enzyme in stress response.