PRL and its homologs accomplish their biological effects through the PRL receptor (PRLR). We evaluated the expression and function of PRLR in the embryo and uterus during the periimplantation period because PRLR deficiency results in implantation failure. In wild-type mice, PRLR expression was localized to undecidualized stromal cells in the antimesometrial border on days 6-8 of pregnancy. A small population of PRLR-expressing cells was observed adjacent to the ectoplacental cone in the mesometrial stroma. Low levels of PRLR expression were also detected in the developing embryo on days 6-8. To determine the significance of PRLR expression in this distribution, we examined implantation and decidualization in PRLR-/- mice. Progesterone (P4) administration rescued infertility in PRLR-/- mice from the periimplantation period to midgestation. Artificially induced decidualization was absent in pseudopregnant PRLR-/- mice but was identical to wild-type in P4-treated PRLR-/- mice. Furthermore, wild-type and P4-treated PRLR-/- mice had similar expression of the implantation-specific genes, LIF, amphiregulin, HB-EGF, COX-1, COX-2, PPARdelta, Hoxa-10, cyclin-D3, VEGF, and its receptors, Flk-1 and neuropilin-1. Together, these results show that luteal P4 production via ovarian PRLR signaling is required for implantation and early pregnancy. The function of uterine PRLR remains unclear. However, the eventual loss of pregnancy in P4-treated PRLR-/- mice suggests that uterine PRLR may be essential for the support of late gestation.