The enzyme 11 beta-hydroxysteroid dehydrogenase (11 beta HSD) converts glucocorticoids to receptor inactive metabolites. Two isoforms of the enzyme exist. 11 beta HSD1 is a low affinity NADP dependent enzyme, while 11 beta HSD2 is a high affinity NAD dependent species thought to be responsible for endowing specificity on the mineralocorticoid receptor and for protecting the fetus from high circulating levels of maternal glucocorticoids. We have recently cloned the human renal 11 beta HSD2 enzyme. In this report we show that 11 beta HSD2 potently inactivates the synthetic glucocorticoid dexamethasone, producing a single product thought to be the 11-dehydrodexamethasone metabolite. Sequence analysis shows that the new isoform is a member of the short-chain alcohol dehydrogenase superfamily (SCAD), most closely related to 17 beta HSD2 and distantly related to 11 beta HSD1.