One of the most distinct characteristics of middle ear cholesteatomas is their capacity for bone destruction during the growth process. In this study, we examined the relationship between inflammatory mechanisms and both bone absorption and the proliferation of epithelial cholesteatoma cells. Cultured cholesteatoma epithelial cells were stimulated by lipopolysaccharide (LPS) and dexamethasone (Dex). We found that the expression of receptor activator of NF-κB ligand (RANKL) and Ki-67 in cultured cholesteatoma cells was increased by LPS stimulation, indicating that LPS promotes not only bone destruction but also the proliferative activities of these cells. The constitutive expression of RANKL and Ki-67 and the production of IL-6 and IL-8 were significantly inhibited by Dex treatment. Further, Dex significantly suppressed the stimulatory effects of LPS on RANKL and Ki-67 expression and on IL-6 and IL-8 production. Based on results so far, Dex likely exerts a beneficial action against acute inflammation. However, further studies might be required to assess its clinical features.