Prolonged exposure (PE) therapy for post-traumatic stress disorder (PTSD) in military veterans has established efficacy, but is ineffective for a substantial number of patients. PE is also associated with high dropout rates. We hypothesized that hydrocortisone augmentation would enhance symptom improvement and reduce drop-out rates by diminishing the distressing effects of traumatic memories retrieved during imaginal exposure. We also hypothesized that in responders, hydrocortisone augmentation would be more effective in reversing glucocorticoid indices associated with PTSD than placebo augmentation. Twenty-four veterans were randomized to receive either 30 mg oral hydrocortisone or placebo prior to PE sessions 3-10 in a double-blind protocol. Glucocorticoid receptor sensitivity was assessed in cultured peripheral blood mononuclear cells (PBMC) using the in vitro lysozyme inhibition test and was determined before and after treatment. Intent-to-treat analysis was performed using latent growth curve modeling of treatment effects on change in PTSD severity over time. Veterans who no longer met diagnostic criteria for PTSD at post-treatment were designated as responders. Veterans randomized to hydrocortisone or placebo augmentation did not differ significantly in clinical severity or glucocorticoid sensitivity at pre-treatment. Hydrocortisone augmentation was associated with greater reduction in total PTSD symptoms compared to placebo, a finding that was explained by significantly greater patient retention in the hydrocortisone augmentation condition. A significant treatment condition by responder status interaction for glucocorticoid sensitivity indicated that responders to hydrocortisone augmentation had the highest pre-treatment glucocorticoid sensitivity (lowest lysozyme IC50-DEX) that diminished over the course of treatment. There was a significant association between decline in glucocorticoid responsiveness and improvement in PTSD symptoms among hydrocortisone recipients. The results of this pilot study suggest that hydrocortisone augmentation of PE may result in greater retention in treatment and thereby promote PTSD symptom improvement. Further, the results suggest that particularly elevated glucocorticoid responsiveness at pre-treatment may identify veterans likely to respond to PE combined with an intervention that targets glucocorticoid sensitivity. Confirmation of these findings will suggest that pharmacologic interventions that target PTSD-associated glucocorticoid dysregulation may be particularly helpful in promoting a positive clinical response to PTSD psychotherapy.