Glucocorticoid receptor (GR) activation has recently been implicated in the initiation of anti-apoptotic signaling pathways in epithelial cell lines grown in culture. However, the evidence that GR-mediated inhibition of tumor cell apoptosis is the mechanism that diminishes chemotherapy effectiveness in vivo is limited. We therefore initiated a breast cancer xenograft study to examine whether or not pretreatment with glucocorticoids (GCs) decreases tumor response to chemotherapy by inhibiting tumor cell apoptosis. Here we report a significant decrease in paclitaxel-induced apoptosis in xenografts from mice pretreated with dexamethasone (Dex). A significant difference in apoptosis in xenografts from Dex/paclitaxel versus paclitaxel treated animals was seen eight days following initiation of chemotherapy. Nine days later, mice treated with Dex/paclitaxel had significantly larger tumors compared with those that received paclitaxel alone (p = 0.032). Dex pretreatment did not significantly affect tumor cell proliferation rates. Taken together, these results demonstrate that systemic Dex administration results in significantly reduced breast cancer xenograft apoptosis in the context of chemotherapy treatment. We also found that systemic Dex treatment results in upregulation of the anti-apoptotic gene MKP-1 and downregulation of pro-apoptotic Bid and TRAIL genes in tumor cells six hours following Dex treatment. These in vivo gene expression changes correlated with significant inhibition of chemotherapy-induced apoptosis. Interestingly, the decreased chemotherapeutic response of Dex-pretreated tumors persisted for several weeks following treatment. These data suggest that GR-mediated transcriptional regulation of pro- and anti-apoptotic genes contributes to the mechanism through which GCs decrease paclitaxel-induced apoptosis.