Corticosteroids have previously been reported to partially inhibit the natural cytotoxic activity of peripheral blood lymphocytes. However, since only a few percent of peripheral lymphocytes are natural killer (NK) cells, it has not been possible to determine whether corticosteroids directly inhibit NK cells or mediate this effect via other cell types. This report documents direct functional inactivation, but unimpeded proliferation, of cloned human NK cells by subphysiologic levels of cortisol. In contrast, high concentrations of testosterone, progesterone or estradiol had no significant effect on proliferation or cytotoxic activity of the cloned NK cells. The kinetics of inhibition of NK function by cortisol are consistent with a transcription-dependent mechanism.