The effect of oestrogen and progesterone on prostaglandin synthesis and on DNA synthesis by rat decidual cells was studied in a culture system. The cells were explanted from deciduoma either during the proliferation phase (namely on the 5th day of leukocytic smear, Day L5:"L5 cells") or during the maintenance phase ("L8 cells") and examined on the second day of culture. Oestradiol-17 beta (7 X 10(-11) M) and progesterone (6 X 10(-8) M) significantly inhibited accumulation of PGE by cells explanted on Day L5: L8-cell cultures showed no significant response to oestradiol and the progesterone effect was markedly reduced. Progesterone stimulated [3H]thymidine incorporation into cells explanted on Day L5, but had no effect on L8-cultures. Other inhibitors of PG synthesis, namely cortisol, flufenamic acid and indomethacin, also had a stimulatory effect on DNA synthesis by L5 cells. PGE2 (5-10 micrograms/ml) inhibited DNA synthesis in control, indomethacin-treated and progesterone-treated L5-cell cultures, suggesting that the progesterone-induced stimulation of DNA synthesis may be in part be due to its inhibitory effect on PGE accumulation by decidual cells. The possibility is discussed that during the proliferation phase of decidual development in vivo, the rate of DNA synthesis may be influenced by steroid-induced changes in PGE content of the tissue.