As a glucocorticoid , the lipophilic structure of prednisolone allows for easy passage through the cell membrane where it then binds to its respective glucocorticoid receptor (GCR) located in the cytoplasm. Upon binding, formation of the GC/GCR complex causes dissociation of chaperone proteins from the glucocorticoid receptor enabling the GC/GCR complex to translocate inside the nucleus. This process occurs within 20 minutes of binding. Once inside the nucleus, the homodimer GC/GCR complex binds to specific DNA binding-sites known as glucocorticoid response elements (GREs) resulting in gene expression or inhibition. Complex binding to positive GREs leads to synthesis of anti-inflammatory proteins while binding to negative GREs block the transcription of inflammatory genes. 
A wide range of psychiatric reactions including affective disorders (such as irritable, euphoric, depressed and labile mood, and suicidal thoughts), psychotic reactions (including mania, delusions, hallucinations, and aggravation of schizophrenia), behavioural disturbances, irritability, anxiety, sleep disturbances, and cognitive dysfunction including confusion and amnesia have been reported. Reactions are common and may occur in both adults and children. In adults, the frequency of severe reactions has been estimated to be 5-6%. Psychological effects have been reported on withdrawal of corticosteroids; the frequency is unknown.