β-carotene 15,15'-oxygenase (BCO1) catalyzes the first step in the conversion of dietary provitamin A carotenoids to vitamin A. This enzyme is expressed in a variety of developing and adult tissues, suggesting that its activity may regulate local retinoid synthesis. Vitamin A and related compounds (retinoids) are critical regulators of lung epithelial development, integrity, and injury repair. A balance between the actions of retinoids and glucocorticoids (GCs) promotes normal lung development and, in particular, alveolarization. Alterations in this balance, including vitamin A deficiency and GC excess, contribute to the development of chronic lung disorders. Consequently, we investigated if GCs counteract retinoid effects in alveolar epithelial cells by mechanisms involving BCO1-dependent local vitamin A metabolism. We demonstrate that BCO1 is expressed in human fetal lung tissue and human alveolar epithelial-like A549 cells. Our results indicate A549 cells metabolize β-carotene to retinal and retinoic acid (RA). GCs exposure using dexamethasone (DEX) decreases BCO1 mRNA and protein levels in A549 cells and reduces BCO1 promoter activity via inhibiting peroxisome proliferator-activated receptor γ (PPARγ) DNA binding. DEX also induces expression of PPARα, which in turn most likely causes a decrease in PPARγ/RXRα heterodimer binding to the bco1 gene promoter and consequent inhibition of bco1 gene expression. PPARα knockdown with siRNA abolishes DEX-induced suppression of BCO1 expression, confirming the requirement for PPARα in this DEX-mediated BCO1 mechanism. Taken together, these findings provide the first evidence that GCs regulate vitamin A (retinoid) signaling via inhibition of bco1 gene expression in a PPARα-dependent manner. These results explicate novel aspects of local GC:retinoid interactions that may contribute to alveolar tissue remodeling in chronic lung diseases that affect children and, possibly, adults.