Proteoglycans participate in the assembly of extracellular matrix, directly by interacting with other matrix components and indirectly by regulating cellular growth-factor responses. We have studied the regulation of gene expression of two small extracellular matrix chondroitin/dermatan sulfate proteoglycans, decorin and biglycan, by dexamethasone and retinoic acid in cultured human skin fibroblasts. Dexamethasone increased decorin production, maximally 4.8-fold, and decorin mRNA levels up to 2.3-fold, but had no effect on biglycan production or mRNA levels. Dexamethasone also prevented transforming growth factor-beta-elicited down-regulation of decorin mRNA levels and production by dermal fibroblasts. In addition, dexamethasone potently inhibited enhancement of biglycan production and mRNA levels by transforming growth factor-beta. Retinoic acid dose dependently reduced decorin mRNA levels (by 51%) and production (by 72%), but had no effect on biglycan gene expression. Retinoic acid did not alter the effect of transforming growth factor-beta on decorin or biglycan production or mRNA levels. These results provide evidence that the effects of glucocorticoids and retinoids on dermal connective tissue are partially mediated via altered expression of decorin and biglycan, which both in turn regulate the activity of transforming growth factor-beta, the most potent stimulator of connective tissue deposition.