Dexamethasone is widely used in preclinical studies and clinical trials to treat inner ear disorders. The results of those studies vary widely, maybe due to the different dexamethasone formulations used. Laboratory (lab) and medical grade (med) dexamethasone (DEX, C22 H29 FO5) and dexamethasone dihydrogen phosphate-disodium (DPS, C22 H28 FNa2 O8 P) were investigated for biocompatibility and bio-efficacy in vitro. The biocompatibility of each dexamethasone formulation in concentrations from 0.03 to 10,000 µM was evaluated using an MTT assay. The concentrations resulting in the highest cell viability were selected to perform a bio-efficiency test using a TNFα-reduction assay. All dexamethasone formulations up to 900 µM are biocompatible in vitro. DPS-lab becomes toxic at 1000 µM and DPS-med at 2000 µM, while DEX-lab and DEX-med become toxic at 4000 µM. Bio-efficacy was evaluated for DEX-lab and DPS-med at 300 µM, for DEX-med at 60 µM, and DPS-lab at 150 µM, resulting in significantly reduced expression of TNFα, with DPS-lab having the highest effect. Different dexamethasone formulations need to be applied in different concentration ranges to be biocompatible. The concentration to be applied in future studies should carefully be chosen based on the respective dexamethasone form, application route and duration to ensure biocompatibility and bio-efficacy.