Corticosteroids inhibit the inflammatory response to a variety of inciting agents and probably delay or slow healing. They inhibit the edema, fibrin deposition, capillary dilation, leukocyte migration, capillary proliferation, fibroblast proliferation, deposition of collagen, and scar formation associated with inflammation.

There is no generally accepted explanation for the mechanism of action of ocular corticosteroids. However, corticosteroids are thought to act by the induction of phospholipase A2 inhibitory proteins, collectively called lipocortins. It is postulated that these proteins control the biosynthesis of potent mediators of inflammation such as prostaglandins and leukotrienes by inhibiting the release of their common precursor arachidonic acid. Arachidonic acid is released from membrane phospholipids by phospholipase A₂.

Corticosteroids are capable of producing a rise in intraocular pressure. In clinical studies of documented steroid-responders, fluorometholone demonstrated a significantly longer average time to produce a rise in intraocular pressure than dexamethasone phosphate; however, in a small percentage of individuals, a significant rise in intraocular pressure occurred within one week. The ultimate magnitude of the rise was equivalent for both drugs.

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