The effect of progesterone on the movement of sterols from the cell surface to the rough endoplasmic reticulum (ER) was examined in rat hepatoma cells. Plasma membranes were labeled exogenously with [3H]cholesterol or [3H]zymosterol. Translocation of the labeled sterols to the rough ER was inferred from their conversion to [3H]cholesteryl esters and [3H]cholesterol, respectively. Progesterone inhibited both of these reactions by more than 90%. The concentration for half-maximal inhibition was 0.7 microgram/ml. Progesterone did not inhibit acyl-CoA:cholesterol acyltransferase activity itself, since the steroid had no effect on the esterification of [3H]cholesterol synthesized in vitro in the rough ER from [3H]zymosterol. Moreover, the small amount of [3H]cholesterol synthesized from plasma membrane [3H]zymosterol in progesterone-treated intact cells was esterified at the same fractional rate as cholesterol in control cells. Subcellular fractionation of cells pulse-labeled with [3H]cholesterol and treated with progesterone suggested that the block in plasma membrane cholesterol transfer to the rough ER occurred at the level of the plasma membrane.