Corticosteroids constitute the most effective current anti-inflammatory therapy for acute and chronic forms of allergic diseases and asthma. Corticosteroids are highly effective in inhibiting the effector function of Th2 cells, eosinophils, and epithelial cells. However, treatment with corticosteroids may also limit beneficial T cell responses, including respiratory tolerance and the development of regulatory T cells (TReg), which actively suppress inflammation in allergic diseases. To examine this possibility, we investigated the effects of corticosteroid administration on the development of respiratory tolerance. Respiratory exposure to Ag-induced T cell tolerance and prevented the subsequent development of allergen-induced airway hyperreactivity. However, treatment with dexamethasone during the delivery of respiratory Ag prevented tolerance, such that allergen sensitization and severe airway hyperreactivity subsequently occurred. Treatment with dexamethasone during respiratory exposure to allergen eliminated the development of IL-10-secreting dendritic cells, which was required for the induction of IL-10-producing allergen-specific TReg cells. Therefore, because allergen-specific TReg cells normally develop to prevent allergic disease and asthma, our results suggest that treatment with corticosteroids, which limit the development of TReg cells and tolerance to allergens, could enhance subsequent Th2 responses and aggravate the long-term course of allergic diseases and asthma.