Ursodeoxycholic acid (UDCA) is the current mainstay of treatment for various liver diseases including primary biliary cirrhosis. UDCA acts as a bile secretagogue, cytoprotective agent, immunomodulator, and inhibitor of cellular apoptosis. Despite this cumulative evidence of the cytoprotective and immunosuppressive effects of UDCA, both the target molecule and pathway of UDCA action remain unknown. We previously described that, in the absence of glucocorticoid ligand, UDCA activates the glucocorticoid receptor (GR) into DNA binding species but does not elicit its transactivational function in a transient transfection assay. Here we further studied the molecular mechanism of UDCA action and revealed that the ligand binding domain of the GR is responsible for UDCA-dependent nuclear translocation of the GR. Indeed, we demonstrated that UDCA acts on the distinct region of the ligand binding domain when compared with the classical GR agonist dexamethasone, resulting in loss of coactivator recruitment and differential regulation of gene expression by the GR. Our data clearly indicated that UDCA, at least in part via activation of the GR, suppresses NF-kappaB-dependent transcription through the intervention of GR-p65 interaction. Together with the established clinical safety of UDCA, we may propose that UDCA could be a prototypical compound for development of a novel and selective GR modifier.