The aims of this study were to develop a pulp capping material containing fluocinolone acetonide (PCFA) and evaluate some of its physical, mechanical, and biological properties. The PCFA is hard setting calcium hydroxide cement containing 50 mmol/L of fluocinolone acetonide (FA). Conditioned medium from the setting material was collected for determination of FA release by high performance liquid chromatography and pH measurement by pH meter. Setting time, compressive strength, disintegration, and acid soluble arsenic content were measured according to ISO 3107:2004. Stability of the material was tested after 3 months storage at 45℃. Cytotoxicity and cell proliferation were evaluated by MTT assay. RT-PCR and Western blotting were used to study the effects of PCFA on RNA (dentin sialophosphoprotein: DSPP) and protein (dentin sialoprotein: DSP) synthesis. Anti-inflammatory effect of PCFA was determined by analysis of cyclooxygenase 2 (COX-2) expression. Dycal® was used as control. The results suggested that PCFA could release suitable concentrations of FA at the first 5 days. The pH, setting time, and arsenic content of PCFA were significantly higher than Dycal® (p < 0.05). The compressive strength and disintegration of the PCFA were comparable to the control. It had good stability after storage in the tested condition. The conditioned medium from PCFA could increase cell proliferation at 72 hours, increase DSPP expression and decrease COX-2 expression (p < 0.05). PCFA may be considered as alternative pulp capping material in the inflamed pulp tissue.