11-hydroxysteroid dehydrogenase type 1 (11-HSD1) acts as a reductase in vivo, regenerating active glucocorticoids within cells from circulating inert 11-keto forms, thus amplifying local glucocorticoid action. 11-HSD1 is predominantly expressed in liver and also in adipose tissue and brain. Mice deficient in 11-HSD1 (11-HSD1^-/-) exhibit adrenal hyperplasia, raised basal corticosterone levels and increased hypothalamic-pituitary-adrenal (HPA) axis responses to stress. While reduced peripheral glucocorticoid regeneration may explain adrenal hypertrophy and exaggerated stress responses, elevated basal glucocorticoid levels supports a role for 11-HSD1 within the brain in amplifying glucocorticoid feedback. To test this hypothesis, apoE-HSD1 mice overexpressing 11-HSD1 in liver were intercrossed with 11-HSD1^-/- mice to determine whether complementation of hepatic 11-HSD1 can restore adrenal and HPA defects. Transgene-mediated delivery of 11-HSD1 activity to the liver rescued adrenal hyperplasia and reversed exaggerated HPA stress responses in 11-HSD1^-/- mice. Unexpectedly, elevated nadir plasma corticosterone levels were also restored to control levels. Consistent with this, CYP11B1 mRNA expression in the adrenal cortex of 11-HSD1^-/- mice was increased by 50%, but returned to control levels in 11-HSD1^-/- mice bearing the apoE-HSD1 transgene. 11-HSD1^-/- mice have lower plasma glucose levels, but the fall in plasma corticosterone with sucrose supplementation was similar in 11-HSD1^-/- and control mice suggesting glucose deficiency is not the main mechanism whereby basal corticosterone levels are elevated in the null mice. Thus regeneration of glucocorticoids by 11-HSD1 in the liver normalises all aspects of HPA axis dysregulation in 11-HSD1^-/- mice, without restoration of enzyme activity in key feedback areas of the forebrain. Therefore, hepatic glucocorticoid metabolism influences basal as well as stress-associated functions of the HPA axis.