Progesterone is the only steroid hormone that is essential for the establishment and maintenance of pregnancy in all mammalian species that have been studied. Mice lacking the progesterone receptor (PR) by targeted mutagenesis exhibit abnormalities in all aspects of reproduction including sexual behavior, mammary gland development, ovulation, and implantation. Implantation in PR null mice fails, in part, because the uterine stromal cells cannot undergo differentiation (the decidual cell reaction). Uterine stromal cells do not divide without progesterone and proliferation is blocked by progesterone antibodies and PR antagonism. In spite of the preeminence of progesterone in female reproduction, its molecular mechanisms of action on target cell proliferation and differentiation are not well understood. Recent studies suggest that progesterone plays a direct role in regulating cell cycle transit by increasing the expression and activation of cell cycle regulatory complexes. Furthermore, this progesterone-dependent regulation of cell cycle transit may provide a unique window of opportunity for uterine stromal cells to exit the proliferative cycle, and if exposed to appropriate agents, enter into the differentiation pathway.