Stromal cells such as fibroblasts play an important role in defining tissue-specific responses during the resolution of inflammation. We hypothesized that this involves tissue-specific regulation of glucocorticoids, mediated via differential regulation of the enzyme 11β-hydroxysteroid dehydrogenase type 1 (11β-HSD1). Expression, activity and function of 11β-HSD1 was assessed in matched fibroblasts derived from various tissues (synovium, bone marrow and skin) obtained from patients with rheumatoid arthritis or osteoarthritis. 11β-HSD1 was expressed in fibroblasts from all tissues but mRNA levels and enzyme activity were higher in synovial fibroblasts (2-fold and 13-fold higher mRNA levels in dermal and synovial fibroblasts, respectively, relative to bone marrow). Expression and activity of the enzyme increased in all fibroblasts following treatment with tumour necrosis factor-α or IL-1β (bone marrow: 8-fold and 37-fold, respectively, compared to vehicle; dermal fibroblasts: 4-fold and 14-fold; synovial fibroblasts: 7-fold and 31-fold; all P < 0.01 compared with vehicle). Treatment with IL-4 or interferon-γ was without effect, and there was no difference in 11β-HSD1 expression between fibroblasts (from any site) obtained from patients with rheumatoid arthritis or osteoarthritis. In the presence of 100 nmol/l cortisone, IL-6 production – a characteristic feature of synovial derived fibroblasts – was significantly reduced in synovial but not dermal or bone marrow fibroblasts. This was prevented by co-treatment with an 11β-HSD inhibitor, emphasizing the potential for autocrine activation of glucocorticoids in synovial fibroblasts. These data indicate that differences in fibroblast-derived glucocorticoid production (via the enzyme 11β-HSD1) between cells from distinct anatomical locations may play a key role in the predeliction of certain tissues to develop persistent inflammation.