In the leaf-nosed bat, Macrotus californicus, a 4.5-month period of delayed early embryogenesis (October-March) precedes a 3.5-month period of normal embryogenesis (March-June). This prolonged gestation provides a unique opportunity to correlate ovarian changes with the events following implantation. The present study investigated luteal cell development and follicular biology during gestation. Circulating progesterone (P) levels following implantation were unchanged before transition to normal development, and were maximal at the start of active gestation. Luteal cell diameters increased during this period. Serum P levels declined prior to parturition, when cells staining positive for 3 beta-hydroxy-5-steroid dehydrogenase-5,4-isomerase (3 beta-HSD) activity were reduced in number and diameter, and enzyme staining was less intense in tissue slices. Subcellular steroidogenic organelles were present during delayed development, but smooth endoplasmic reticulum (SER) was markedly increased after the resumption of normal development at which time also luteal cells reacted positively to staining for 17 beta-HSD. Before parturition, lipid droplet accumulation and reduced SER suggested a reduction in steroid secretion. Large multilaminar follicles stained positive for 3 beta-HSD activity throughout gestation and for 17 beta-HSD except in late delayed development. Thus, the delay in embryogenesis may be due to an inadequately developed corpus luteum or to the steroidogenic activity of the multilaminar follicles.