Although glucocorticoids (GCs) are a mainstay in the clinical management of asthma, the target cells that mediate their therapeutic effects are unknown. Contrary to our expectation, we found that GC receptor (GR) expression in immune cells was dispensable for successful therapy of allergic airway inflammation (AAI) with dexamethasone. Instead, GC treatment was compromised in mice expressing a defective GR in the nonhematopoietic compartment or selectively lacking the GR in airway epithelial cells. Further, we found that an intact GR dimerization interface was a prerequisite for the suppression of AAI and airway hyperresponsiveness by GCs. Our observation that the ability of dexamethasone to modulate gene expression in airway epithelial cells coincided with its potency to resolve AAI supports a crucial role for transcriptional regulation by the GR in this cell type. Taken together, we identified an unknown mode of GC action in the treatment of allergic asthma that might help to develop more specific therapies in the future.