The glucose-6-phosphatase catalytic subunit 2 (G6PC2) gene encodes an islet-specific glucose-6-phosphatase catalytic subunit. G6PC2 forms a substrate cycle with glucokinase that determines the glucose sensitivity of insulin secretion. Consequently, deletion of G6pc2 lowers fasting blood glucose (FBG) without affecting fasting plasma insulin. Although chronic elevation of FBG is detrimental to health, glucocorticoids induce G6PC2 expression, suggesting that G6PC2 evolved to transiently modulate FBG under conditions of glucocorticoid-related stress. We show, using competition and mutagenesis experiments, that the synthetic glucocorticoid dexamethasone (Dex) induces G6PC2 promoter activity through a mechanism involving displacement of the islet-enriched transcription factor MafA by the glucocorticoid receptor. The induction of G6PC2 promoter activity by Dex is modulated by a single nucleotide polymorphism, previously linked to altered FBG in humans, that affects FOXA2 binding. A 5-day repeated injection paradigm was used to examine the chronic effect of Dex on FBG and glucose tolerance in wild-type (WT) and G6pc2 knockout mice. Acute Dex treatment only induces G6pc2 expression in 129SvEv but not C57BL/6J mice, but this chronic treatment induced G6pc2 expression in both. In 6-hour fasted C57BL/6J WT mice, Dex treatment lowered FBG and improved glucose tolerance, with G6pc2 deletion exacerbating the decrease in FBG and enhancing the improvement in glucose tolerance. In contrast, in 24-hour fasted C57BL/6J WT mice, Dex treatment raised FBG but still improved glucose tolerance, with G6pc2 deletion limiting the increase in FBG and enhancing the improvement in glucose tolerance. These observations demonstrate that G6pc2 modulates the complex effects of Dex on both FBG and glucose tolerance.