The risk of glucocorticoid‐induced osteoporosis increases substantially with age but there is considerable individual variation. In recent studies we have shown that the effects of glucocorticoids on bone are dependent on autocrine actions of the enzyme 11β‐hydroxysteroid dehydrogenase type 1 (11β‐HSD1); expression of 11β‐HSD1 in osteoblasts (OBs) facilitates local synthesis of active glucocorticoids with consequent effects on osteoblastic proliferation and differentiation. Using primary cultures of human OBs, we have now characterized the age‐specific variation in osteoblastic 11β‐HSD1 and defined enzyme kinetics and regulation using natural and therapeutic glucocorticoids. 11β‐HSD1 reductase activity (cortisone to cortisol conversion) was recognized in all OB cultures and correlated positively with age (r = 0.58 with all cultures, p < 0.01, and n = 18; r = 0.87 with calcaneal‐derived cultures, p < 0.001, and n = 14). Glucocorticoid treatment caused a time‐ and dose‐dependent increase in 11β‐HSD1 activity over control (e.g., dexamethasone [DEX; 1 μM], 2.6‐fold ± 0.5 (mean ± SE), p < 0.001, and n = 16; cortisol (100 nM), 1.7‐fold ± 0.1, p < 0.05, and n = 14). Similar increases in 11β‐HSD1 mRNA expression were indicated using real‐time quantitative reverse‐transcription polymerase chain reaction (RT‐PCR) analyses (3.5‐fold with DEX, p < 0.01; 2.5‐fold with cortisol, p < 0.05). The capacity of 11β‐HSD1 to metabolize the synthetic glucocorticoids prednisone and prednisolone was investigated in human OBs (hOBs) and fetal kidney‐293 cells stably transfected with human 11β‐HSD1 cDNA. Transfected cells and hOBs were able to interconvert prednisone and prednisolone with reaction kinetics indistinguishable from those for cortisone and cortisol. To assess the in vivo availability of substrates for osteoblastic 11β‐HSD1, plasma cortisone and prednisone levels were measured in normal males before and after oral prednisolone (5 mg). The 9:00 a.m. serum cortisone levels were 110 ± 5 nmol/liter and prednisone levels peaked at 78 ± 23 nmol/liter 120 minutes after administration of prednisolone. Thus, therapeutic use of steroids increases substrate availability for 11β‐HSD1 in bone. These studies indicate that activation of glucocorticoids at an autocrine level within bone is likely to play an important role in the age‐related decrease in bone formation and increased risk of glucocorticoid‐induced osteoporosis.