During early pregnancy the bovine embryo must produce a protein called interferon tau which inhibits the development of the luteolytic mechanism. Failure to inhibit luteolysis is the major cause of pregnancy loss in cows. The embryo must produce sufficient quantities of interferon tau by about day 16 to prevent luteolysis. Its ability to achieve this is largely dependent on the pattern of maternal progesterone production. A late rise in progesterone after ovulation or poor progesterone secretion during the luteal phase results in the development of poor embryos capable of producing little or no interferon tau at the critical time. The embryo inhibits luteolysis by preventing development of oxytocin receptors on the luminal epithelium of the uterine endometrium and thus oxytocin-induced secretion of PGF2 alpha and by the induction of a prostaglandin synthesis inhibitor within the endometrium. In sheep it has been hypothesised that interferon tau acts to inhibit endometrial oestrogen receptors and thus oestrogen-induced up-regulation of oxytocin receptors. In cows, the embryo inhibits the development of oxytocin receptors and the initiation of luteolysis without causing any change in uterine oestrogen receptors. Thus in the cow, the mechanism by which interferon tau inhibits oxytocin receptor development remains to be determined.