A mechanism-based model for pharmacodynamic effects of dexamethasone (DEX) was incorporated into our model for arthritis disease progression in the rat to aid in identification of the primary factors responsible for edema and bone loss. Collagen-induced arthritis was produced in male Lewis rats after injection of type II porcine collagen. DEX was given subcutaneously in single doses of 0.225 or 2.25 mg/kg or 7-day multiple doses of 0.045 or 0.225 mg/kg at 21 days postdisease induction. Effects on disease progression were measured by paw swelling, bone mineral density (BMD), body weights, plasma corticosterone (CST), and tumor necrosis factor (TNF)-alpha, interleukin (IL)-1beta, IL-6, and glucocorticoid receptor (GR) mRNA expression in paw tissue. Lumbar and femur BMD was determined by PIXImus II dual-energy X-ray absorptiometry. Plasma CST was assayed by high-performance liquid chromatography. Cytokine and GR mRNA were assayed by quantitative real-time polymerase chain reaction. Indirect response models, drug interaction models, transduction processes, and the fifth-generation model of corticosteroid dynamics were integrated and applied using S-ADAPT software to describe how dexamethasone binding to GR can regulate diverse processes. Cytokine mRNA, GR mRNA, plasma CST, and paw edema were suppressed after DEX administration. TNF-alpha mRNA expression and BMD seemed to increase immediately after dosing but were ultimately reduced. Model parameters indicated that IL-6 and IL-1beta were most sensitive to inhibition by DEX. TNF-alpha seemed to primarily influence edema, whereas IL-6 contributed the most to bone loss. Lower doses of corticosteroids may be sufficient to suppress the cytokines most relevant to bone erosion.