11beta-hydroxysteroid dehydrogenase (11beta-HSD) type 2 has been considered to protect the mineralocorticoid receptor (MR) by converting 11beta-hydroxyglucocorticoids into their inactive 11-keto forms, thereby providing specificity to the MR for aldosterone. To investigate the functional protection of the MR by 11beta-HSD2, we coexpressed epitope-tagged MR and 11beta-HSD2 in HEK-293 cells lacking 11beta-HSD2 activity and analyzed their subcellular localization by fluorescence microscopy. When expressed alone in the absence of hormones, the MR was both cytoplasmic and nuclear. However, when coexpressed with 11beta-HSD2, the MR displayed a reticular distribution pattern, suggesting association with 11beta-HSD2 at the endoplasmic reticulum membrane. The endoplasmic reticulum membrane localization of the MR was observed upon coexpression only with 11beta-HSD2, but not with 11beta-HSD1 or other steroid-metabolizing enzymes. Aldosterone induced rapid nuclear translocation of the MR, whereas moderate cortisol concentrations (10-200 nm) did not activate the receptor, due to 11beta-HSD2-dependent oxidation to cortisone. Compromised 11beta-HSD2 activity (due to genetic mutations, the presence of inhibitors, or saturating cortisol concentrations) led to cortisol-induced nuclear accumulation of the MR. Surprisingly, the 11beta-HSD2 product cortisone blocked the aldosterone-induced MR activation by a strictly 11beta-HSD2-dependent mechanism. Our results provide evidence that 11beta-HSD2, besides inactivating 11beta-hydroxyglucocorticoids, functionally interacts with the MR and directly regulates the magnitude of aldosterone-induced MR activation.