Endometrial stromal differentiation (decidualization) is essential for implantation of the developing blastocyst. To investigate the process of progesterone (P)-induced decidualization of human endometrial stromal cells (ESC), a complementary DNA library enriched with P-induced genes was constructed from cultured human ESC by subtractive hybridization and the polymerase chain reaction. One of the isolated clones was the complementary DNA for the tissue inhibitor of metalloproteinase-3 (TIMP-3), a recently identified member of the human TIMP family. When human ESC were cultured in the presence of P for 6 days, the induction of TIMP-3 messenger RNA (mRNA) expression was observed by Northern blotting. In contrast, the marked induction of PRL mRNA expression and morphological changes were observed after 9 days of culture. P-induced TIMP-3 mRNA expression was dose dependent, and this induction was inhibited by the antiprogestin RU486. Estrogen did not induce TIMP-3 mRNA expression under similar conditions. In situ hybridization analysis of endometria from nonpregnant women revealed that the TIMP-3 mRNA expression was restricted to predecidualized stromal cells. At the feto-maternal interface, TIMP-3 expression was observed in fetal extravillous trophoblasts that had invaded the maternal decidual tissues as well as in the maternal decidual cells. These findings suggest that TIMP-3 is a sensitive indicator of ESC decidualization, and that the induction of TIMP-3 expression in decidual cells and trophoblasts may be important in the regulation of trophoblast invasion.