Endogenous glucocorticoids are implicated in the development and resolution of inflammation. Until recently it was thought that these glucocorticoids arose primarily from the adrenal gland. However, it is now known that several cell types can generate active glucocorticoids within their cytoplasm through expression of the 11β-hydroxysteroid dehydrogenase type 1 (11β-HSD1) enzyme. In a more limited range of cell types, glucocorticoids can be inactivated by the related 11β-HSD2 enzyme. Both enzymes are regulated by inflammation in various settings. In rheumatoid arthritis, 11β-HSD activity is present in the inflamed synovium and appears to influence articular and extraarticular disease processes. The generation of active glucocorticoids in the synovium is strongly linked to the level of inflammation. This local production of glucocorticoids is likely to have paracrine consequences and could underpin inflammation-associated bone loss. The role of 11β-HSD enzymes in the severity and persistence of inflammatory arthritis in a clinical setting is currently being explored.