Although widely prescribed for their potent antiinflammatory actions, glucocorticoid drugs (e.g., dexamethasone) cause undesirable side effects that are features of the metabolic syndrome, including hyperglycemia, fatty liver, insulin resistance, and type II diabetes. Liver x receptors (LXRs) are nuclear receptors that respond to cholesterol metabolites and regulate the expression of a subset of glucocorticoid target genes. Here, we show LXRβ is required to mediate many of the negative side effects of glucocorticoids. Mice lacking LXRβ (but not LXRα) were resistant to dexamethasone-induced hyperglycemia, hyperinsulinemia, and hepatic steatosis, but remained sensitive to dexamethasone-dependent repression of the immune system. In vivo, LXRα/β knockout mice demonstrated reduced dexamethasone-induced expression of the key hepatic gluconeogenic gene, phosphoenolpyruvate carboxykinase (PEPCK). In perfused liver and primary mouse hepatocytes, LXRβ was required for glucocorticoid-induced recruitment of the glucocorticoid receptor to the PEPCK promoter. These findings suggest a new avenue for the design of safer glucocorticoid drugs through a mechanism of selective glucocorticoid receptor transactivation.