Inflammatory mediators, such as interleukin-1β (IL-1β) and tumor necrosis factor-α (TNFα) are secreted by fixed tissue macrophages and exhibit local autocrine and paracrine effects as well as distant endocrine effects. Human fetal Kupffer cells, the fixed tissue macrophages of the liver, may play a role as modulators of immune and endocrine function in early embryonic and fetal development. In the present study we isolated human fetal Kupffer cells to greater than 90% purity and prepared short term cultures to investigate the effect of glucocorticoids on the secretion of the cytokine TNFα. Fetal Kupffer cells secreted TNFα and IL-1β after culture with bacterial lipopolysaccharide (LPS), indicating that these cells express mature macrophage function. Cortisol and dexamethasone dramatically suppressed the LPS-stimulated secretion of TNFα by fetal Kupffer cells. The inhibitory effects of glucocorticoids appeared to be specific, since estrogen, progesterone, and testosterone had no effect on LPS stimulation of TNFα production. None of the steroids tested altered basal production or enhanced the LPS-stimulated production of TNFα by fetal Kupffer cells. The inhibition by glucocorticoids could be reversed by the addition of RU 486, indicating that this effect was mediated by the glucocorticoid receptor. These results demonstrate that human fetal macrophages demonstrate mature macrophage function in early gestation; they can be activated to produce TNFα by a well characterized modulator of cellular function (LPS) and suppressed by glucocorticoids.