Glucocorticoid (GC)-responsive epithelial–mesenchymal interactions regulate lung development. The GC receptor (GR) mediates GC signaling. Mice lacking GR in all tissues die at birth of respiratory failure. To determine the specific need for epithelial GR in lung development, we bred triple transgenic mice that carry SPC/rtTA, tet-O-Cre, and floxed, but not wild-type, GR genes. When exposed to doxycycline in utero, triple transgenic (GRepi⁻) mice exhibit a Cre-mediated recombination event that inactivates the floxed GR gene in airway epithelial cells. Immunofluorescence confirmed the elimination of GR in Cre-positive airway epithelial cells of late gestation GRepi⁻ mice. Embryonic Day 18.5 pups had a relatively immature appearance with increased lung cellularity and increased pools of glycogen in the epithelium. Postnatal Day 0.5 pups had decreased viability. We used quantitative RT-PCR to demonstrate that specific elimination of epithelial immunoreactive GR in GRepi⁻ mice is associated with reduced mRNA expression for surfactant proteins (SPs) A, B, C, and D; β- and γ-ENaC; T1α; the 10-kD Clara cell protein (CCSP); and aquaporin 5 (AQP5). Western blots confirmed reduced levels of AQP5 protein. No reduction in the levels of the GR transport protein importin (IPO)-13 was observed. Our findings demonstrate a requirement for lung epithelial cell GR in normal lung development. We speculate that impaired epithelial differentiation, leading to decreased SPs, transepithelial Na, and liquid absorption at birth, may contribute to the reduced survival of newborn mice with suppressed lung epithelial GR.