Abnormal regulation of collagen synthesis has been observed in fibroblasts from keloids, benign collagenous tumors that develop as a result of an inherited defect in dermal wound healing. Hydrocortisone reduces the rate of collagen synthesis in fibroblasts from normal adult dermis and scars, but fails to down regulate collagen synthesis in keloid-derived fibroblasts. We show here that loss of glucocorticoid control of collagen synthesis in keloid cells is due to an inability of hydrocortisone to reduce the levels of types I, III, and V collagen mRNA, whereas it coordinately lowers these RNAs in normal adult cells. The defective regulatory mechanism is expressed only in fibroblasts from the lesion. Fibroblasts from uninvolved dermis respond normally to hydrocortisone. Not all glucocorticoid-modulated matrix proteins are abnormally regulated in this disorder; fibronectin mRNA is induced to a similar extent in normal and keloid cells. The failure of hydrocortisone to reduce collagen gene expression is also seen in fibroblasts from fetal dermis. We have reported similarities between keloid and fetal cells with regard to growth factor requirements and growth response to hydrocortisone. Thus, keloids may be due to the inappropriate expression of a pattern of growth and matrix production that is developmentally regulated.