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The ovarian steroid hormone progesterone is a major regulator of uterine function. The actions of this hormone is mediated through its cognate receptor, the progesterone receptor, Pgr. Ablation of the Pgr has shown that this receptor is critical for all female reproductive functions including the ability of the uterus to support and maintain the development of the implanting mouse embryo. High density DNA microarray analysis has identified direct and indirect targets of Pgr action. One of the targets of Pgr action is a member of the Hedgehog morphogen Indian Hedgehog, Ihh. Ihh and members of the Hh signaling cascade show a coordinate expression pattern in the mouse uterus during the preimplantation period of pregnancy. The expression of Ihh and its receptor Patched-1, Ptc1, as well as, down stream targets of Ihh-Ptch1 signaling, such as the orphan nuclear receptor COUP-TF II show that this morphogen pathway mediates communication between the uterine epithelial and stromal compartments. The members of the Ihh signaling axis may function to coordinate the proliferation, vascularization and differentiation of the uterine stroma during pregnancy. This analysis demonstrates that progesterone regulates uterine function in the mouse by coordinating the signals from the uterine epithelium to stroma in the preimplantation mouse uterus.