Glucocorticoid hormones stimulate adherens junction and tight junction formation in Con8 mammary epithelial tumor cells and induce the production of a stable nonphosphorylated beta-catenin protein localized exclusively to the cell periphery. Glycogen Synthase Kinase-3 (GSK3) phosphorylation of beta-catenin is known to trigger the degradation of this adherens junction protein suggesting that steroid activated cascades may be targeting this protein kinase. We now demonstrate that treatment with the synthetic glucocorticoid dexamethasone induces the ubiquitin-26S proteasome mediated degradation of GSK3 protein with no change in GSK3 transcript levels. In transfected cells, deletion of the N-terminal nine amino acids or mutation of the serine-9 phosphorylation site on GSK3-beta prevented its glucocorticoid induced degradation. Expression of stabilized GSK3 mutant proteins ablated the glucocorticoid induced tight junction sealing and resulted in production of a nonphosphorylated beta-catenin that localizes to both the nucleus and the cell periphery in steroid treated cells. Serine-9 on GSK3 can be phosphorylated by Sgk (serum- and glucocorticoid- induced protein kinase) and by Akt. Expression of dominant negative forms of either Sgk or Akt inhibited glucocorticoid induced GSK3 ubiquitination and degradation, and disrupted the dexamethasone induced effects on beta-catenin dynamics. Furthermore, the steroid induced tight junction sealing is attenuated in cells expressing dominant negative forms of either Sgk or Akt, although the effect of blunting Sgk signaling was significantly greater. Taken together, we have uncovered a new cellular cascade in which Sgk and Akt trigger the glucocorticoid regulated phosphorylation, ubiquitination and degradation of GSK3, which alters beta-catenin dynamics, leading to the formation of adherens junctions and tight junction sealing.