Estradiol is known to play an important role in the growth and differentiation of rat uterine stromal cells into decidual cells. In particular, this hormone with progesterone is necessary for blastocyst implantation and subsequent decidualization in the rat. Although binding experiments have demonstrated the presence of estrogen-binding sites, no evidence exists as to whether the rat decidua expresses both isoforms of the estrogen receptor (ER), alpha and beta. In this investigation, we analyzed the expression of decidual ERalpha and ERbeta, studied their regulation by PRL and steroid hormones and examined the ability of decidual ERp to transduce the estradiol signal to the progesterone receptor. Immunocytochemistry, RT-PCR, and Northern blot analysis showed that both ER species are coexpressed in the decidua during pseudopregnancy. Interestingly, these genes were preferentially found in a cell population localized in the antimesometrial site of the uterus where blastocyst implantation takes place. Using decidual cells in primary culture obtained from pseudopregnant rats and a decidua-derived cell line (GG-AD), we show a differential regulation of ERalpha and ERbeta by PRL and ovarian steroid hormones. Whereas PRL, estradiol, and progesterone all increased ERbeta messenger RNA (mRNA) expression in a dose-dependent manner, only PRL up-regulated the mRNA levels of ERa. Estradiol had no effect on ERalpha expression, whereas progesterone markedly decreased its mRNA levels. Interestingly, progesterone, which up-regulates the ability of PRL to signal to a PRL-regulated gene in mammary-gland derived cells, prevented PRL stimulation of decidual ERalpha and had no synergistic effect on ERbeta expression. The use of GG-AD cells, which express only ERbeta, allowed us to demonstrate that this receptor subtype is functional and transduces estradiol signal to the progesterone receptor. In summary, the results of this investigation have revealed that ERbeta is expressed in addition to ERalpha in the rat decidua, and that the expression of both ERs are cell specific and differentially regulated by PRL and steroids. One salient finding of this investigation is that progesterone down-regulates ERalpha, but concomitantly increases the expression of a functional ERbeta that mediates estradiol up-regulation of the decidual progesterone receptor.