During early pregnancy, steroid hormones estrogen (E) and progesterone (P) regulate a complex series of interactions between the implanting embryo and the uterus by controlling the proliferation and differentiation of uterine epithelium and stroma in a timely manner. To identify the steroid-regulated genes that control these functions, we performed messenger RNA profiling of mouse uterine tissues at the time of implantation. Our analysis revealed that the expression of the transcription factor CCAAT/enhancer-binding protein beta (C/EBPbeta) is rapidly induced in the pregnant uterus at the time of blastocyst attachment. The expression of C/EBPbeta increased further during the decidualization phase of pregnancy and was localized in the proliferating as well as the decidualized stromal cells surrounding the implanted embryo. Administration of E or P to ovariectomized females induced C/EBPbeta expression in both uterine epithelium and stroma, showing a dual regulation of this gene by these hormones. The female C/EBPbeta-null mice are infertile. We, therefore, assessed steroid-hormone-dependent responses in the uteri of these mice. We observed that E-induced proliferation of uterine epithelial cells is markedly compromised in the absence of C/EBPbeta. Most strikingly, there was a complete lack of response of the C/EBPbeta-deficient uteri to an artificial deciduogenic stimulus, indicating a critical role of this transcription factor in regulating the decidualization program. Further analysis revealed defects in steroid-induced stromal cell proliferation and differentiation in C/EBPbeta-null uteri. Collectively, our studies established that C/EBPbeta is a key mediator of steroid responsiveness of the epithelium and stroma in the mouse uterus.