By Northern blot analysis and in situ hybridization, we have determined that, at term, the rat uterine epithelium represents a major site of oxytocin (OT) gene expression. OT mRNA levels increase > 150-fold during pregnancy and, at term, exceed hypothalamic OT mRNA by a factor of 70. By cryoultramicroscopy, OT immunoreactivity was localized to transport vesicles in the apical compartment of uterine epithelial cells. Estrogens (E) act as a strong inducer of uterine OT gene expression in vivo, and this effect is potentiated 7-fold by concomitant progesterone (P) administration. We have also cloned the rat OT receptor (OTR) gene and developed a polymerase chain reaction (PCR)-based assay to measure OTR mRNA. Whereas OTR mRNA is strongly induced by E, P does not potentiate but slightly attenuates the E-induced rise. However, E-induced OT binding is completely reversed by concomitant P administration, suggesting an additional post-transcriptional effect of P. The mechanisms of E-induction of the uterine OT gene remain unclear, inasmuch as the OTR gene promoter does not contain a classical estrogen response element (ERE). Moreover, transfection analysis of a 3.1 kb OTR gene promoter fragment linked to a luciferase reporter gene indicates that promoter activity is induced 5-fold by calcium ionophore A23187 but not by E.