Progesterone, which is normally produced in the endoplasmic reticulum, was found to be rapidly degraded in the cytosolic fraction of the guinea pig adrenal cortex in vitro. Assuming this finding reflects what happens in vivo raises a question as to the source of progesterone for interacting with a nuclear progesterone-binding protein (P4-BP) that exists in this model system. It was subsequently found that pregnenolone, which in contrast to progesterone is relatively stable in the cytosol, was converted to progesterone by endogenous nuclear 3 beta-ol dehydrogenase. It was also determined that the nuclear-derived progesterone specifically bound to the nuclear P4-BP which is distinct from the classical progesterone receptor. The guinea pig adrenocortical cytosol contains a specific pregnenolone-binding protein (P5-BP) that could be virtue of its pregnenolone binding activity regulate the conversion of pregnenolone to progesterone in the nuclear compartment and thereby reduce the binding of progesterone to the nuclear P4-BP. A partially purified P5-BP preparation markedly inhibited the nuclear conversion of pregnenolone to progesterone and reduced the binding of progesterone to the nuclear P4-BP (P5-BP did not directly inhibit binding of progesterone to the nuclear P4-BP). The ability of P5-BP to inhibit the conversion of pregnenolone to progesterone was destroyed by heat and alkaline phosphatase treatment. The binding of pregnenolone to the P5-BP, as previously reported, is regulated by phosphorylation/dephosphorylation, and alkaline phosphatase-treated P5-BP loses the ability to bind pregnenolone; this process can be reversed by a cytosolic kinase. This provides a mechanism for controlled release of bound steroid. These results suggest that P5-BP regulates the nuclear conversion of pregnenolone to progesterone and thus the binding of progesterone to the nuclear P4-BP.