All cardinal events during the reproductive cycle, including ovulation, implantation, and menstruation, are characterized by a profound tissue remodeling and an associated local inflammatory response. The ovarian hormone progesterone is a key modulator of inflammatory signals in reproductive tissues, but the underlying mechanisms are not well understood. In this study, we report that differentiating human endometrial stromal cells (ESCs) acquire resistance to interferon-gamma (IFNgamma)-dependent signal transducers and activators of transcription (STAT) 1 signaling, although phosphorylation, nuclear translocation, and binding of STAT1 to DNA, are unaffected. These observations prompted an investigation into the role of nuclear repressors of STAT1 signaling. We demonstrate that protein inhibitor of activated STAT-y is complexed to the progesterone receptor (PR) in human ESCs and that its ability to repress STAT1 signaling is dependent upon activation of PR in response to hormone binding. Conversely, IFNgamma and protein inhibitor of activated STAT-y synergistically inhibited PR-dependent transcription, demonstrating that the progesterone and IFNgamma signaling pathways engage in reciprocal transcriptional antagonism in human endometrium.