LEFTY is expressed in normal endometrium in cells that decidualize. To understand the importance of this expression, we have studied the effect of LEFTY on decidualization in vitro and in vivo. Exposure of human uterine fibroblast (HuF) cells to recombinant LEFTY blocked the induction of the decidual differentiation-specific marker genes, IGFBP1 (IGF-binding protein 1) and PRL (prolactin) in response to medroxyprogesterone acetate, estradiol, and prostaglandin E2. The inhibitory effect was associated with decreased induction of the transcription factors ETS1 and FOXO1, both of which are essential for decidualization. Overexpression of LEFTY in decidualized HuF cells with an adenovirus that transduced LEFTY caused a marked decrease in IGFBP1 secretion, and withdrawal of medroxyprogesterone acetate from decidualized cells resulted in a decrease in IGFBP1 secretion and an increase in LEFTY expression. Moreover, overexpression of LEFTY in decidualized cells reprogrammed the cells to a less differentiated state and attenuated expression of decidual markers. Uterine decidualization was markedly attenuated and litter size was significantly reduced by retroviral transduction of LEFTY in the uterine horns of pregnant mice or by induction of LEFTY expression by doxycycline treatment in Tet-On conditional LEFTY transgenic pregnant mice. In addition, administration of the contraceptive agent drospirenone to ovariectomized mice induced a marked increase in LEFTY expression and inhibited decidualization. Taken together, these finding indicate that LEFTY acts as a molecular switch that modulates both the induction of decidual differentiation and the maintenance of a decidualized state. Because decidual cells express abundant amounts of LEFTY, the action of LEFTY on decidualization occurs by an autocrine mechanism.