Primary biliary cirrhosis (PBC) is a cholestatic disease associated with autoimmune phenomena and alterations in both biliary bicarbonate excretion and expression of the bicarbonate carrier AE2. The bile acid ursodeoxycholic acid (UCDA) is currently used in treatment of cholestatic liver diseases and is the treatment of choice in PBC; however, a subset of PBC patients respond poorly to UDCA monotherapy. In these patients, a combination of UDCA and glucocorticoid therapy appears to be beneficial. To address the mechanism of this benefit, we analyzed the effects of UDCA and dexamethasone on AE2 gene expression in human liver cells from hepatocyte and cholangiocyte lineages. The combination of UDCA and dexamethasone, but not UDCA or dexamethasone alone, increased the expression of liver-enriched alternative mRNA isoforms AE2b1 and AE2b2 and enhanced AE2 activity. Similar effects were obtained after replacing UDCA with UDCA conjugates. In in vitro and in vivo reporter assays, we found that a UDCA/dexamethasone combination upregulated human AE2 alternate overlapping promoter sequences from which AE2b1 and AE2b2 are expressed. In chromatin immunoprecipitation assays, we demonstrated that combination UCDA/dexamethasone treatment induced p300-related interactions between HNF1 and glucocorticoid receptor on the AE2 alternate promoter. Our data provide a potential molecular explanation for the beneficial effects of the combination of UDCA and glucocorticoids in PBC patients with inadequate response to UDCA monotherapy.