In higher eukaryotes, steroid receptors are general modulators of gene activity which bind to DNA hormone response elements (HREs) in the vicinity of regulated promoters. Analysis of mutant and chimaeric receptor proteins in gene transfer experiments has identified the domains responsible for hormone binding, interaction with the HREs and transactivation, but the transactivating function of hormone receptors has proved difficult to reproduce in cell-free assays. Here we describe a crude in vitro system in which transcription from the mouse mammary tumour virus (MMTV) promoter is increased up to 10-fold by native progesterone receptor from rabbit uterus. The stimulatory effect must depend on receptor binding to the MMTV-HRE as it is abolished by deletion or mutation of the HRE and by HRE-oligonucleotide competition. The nuclear factor-I binding site immediately downstream of the HRE, however, does not appear to be essential to progesterone receptor-mediated in vitro stimulation of MMTV transcription. The transactivation activity of the progesterone receptor depends on binding of a functional ligand and so this assay should be useful for dissection of the mechanism of transcription activation by steroid hormones.