Recent data are consistent with the presence of two 17 beta-hydroxysteroid oxidoreductase (17 beta-HOR) activities in placental homogenates. One is localized to intracellular membrane fractions. The conversion of 17 beta-estradiol (E2) to estrone (E1) by this enzyme can be completely inhibited in vitro by C19 and C21 steroids. The second activity is detected in microsomes, but is recovered principally in the cytosol. It also has 20 alpha-HOR activity, but has a high affinity only for C18 steroids. We used this difference to estimate the relative contributions of the two enzymes to E2, E1, and testosterone (T) metabolism by villous tissue in vitro. Fragments of tissue from vaginally delivered placentas (38-40 weeks) were incubated with [3H]E2, [3H]E1, or [3H]T as substrates and various unlabeled steroids as potential inhibitors. Approximately 40% of the E2 to E1 reaction was not inhibited by C19 steroids at 100-200 microM, whereas the conversion of T to androstenedione was inhibited by 90% or more under similar conditions. In contrast, the metabolizable C19 and C21 steroids, 5 alpha-dihydrotestosterone and 20 alpha-dihydroprogesterone, which inhibited the conversion of E1 to E2 by microsomes, stimulated E2 formation from E1 by villi. We conclude that nonspecific 17 beta-HOR accounts for approximately 60% of the E2 to E1 conversion and nearly all of the T to androstenedione conversion in villous tissue fragments. The data also suggest that net E2 formation in villi is catalyzed principally by the C18-specific 17 beta-HOR.