Treatment of progesterone binding globulin (PBG) with tetranitromethane (TNM) resulted in a loss of steroid binding activity (inactivation) which was dependent on both time and concentration of reagent. Scatchard analysis of binding revealed that inactivation was due to a decrease in binding site number with no effect upon the affinity of PBG for steroid. Incorporation studies demonstrated that the loss of binding activity correlated with the incorporation of 1.3 nitro groups per molecule of PBG. The involvement of the steroid binding site in the reaction was shown by the ability of progesterone, but not cortisol, to protect against inactivation. Treatment with N-acetylimidazole did not inactivate PBG nor did the conversion of nitrotyrosyl residues to amino-tyrosines regenerate binding activity, suggesting that the pheolic hydroxyl is not involved in steroid binding. These studies suggest that inactivation was due to the incorporation of a bulky group into the aromatic ring of a tyrosine present at the steroid binding site thus blocking its ability to participate in hydrophobic interactions with the ligand.