NUMEROUS differences have been demonstrated between normal and transformed cells in culture. One characteristic finding is the presence of a 2-2.5 × 105 molecular weight externally disposed glycoprotein (fibronectin) on normal cells and its absence from cell surface association in transformed cells (see refs 1-3 for reviews). Transformed human cells are known to synthesise and shed fibronectin, although at a much lower rate than comparable normal cells4,5. Studies using immunofluorescence or immunoperoxidase methods have demonstrated fibronectin in pericellular structures of fibroblasts and myoblasts in what we have termed an extracellular filamentous matrix 6. In transformed cells that are producing fibronectin, though at a lower rate, there is a failure to incorporate the glycoprotein into the extracellular matrix. There is also a similar failure to incorporate collagen into a cellular matrix in transformed fibroblasts7. The function of this protein, fibronectin, is thought to be related to cellular adhesiveness and perhaps thereby have some role in cell shape. Transformed cells are less adhesive to each other and to substrates when grown in vitro and upon addition of exogenous fibronectin there is a concomitant increase in adhesiveness and change in cell shape8,9. There are many examples of glucocorticoids modulating differentiation some of which include, liver10, pancreas11, mammary gland12, retina13 and myoblasts14. Recent work in the exocrine pancreas11 suggests that glucocorticoids may induce specific enzymes without altering the level of general cellular proteins. Glucocorticoids have been shown to stimulate proliferation in growth arrested cells15 and modify in a synergistic or inhibitory manner cellular responses to other hormones. We report here the effects of dexamethasone on modifying one phenotypic characteristic of cells, namely the occurrence of an extracellular filamentous matrix consisting of fibronectin and collagen. Based on the old hypothesis that transformed or malignant cells are arrested in differentiation, we consider development of the matrix a manifestation of the differentiated state of fibroblasts.