Vaginal progesterone has a potential beneficial effect in postponing of preterm labor by suppression of prostaglandins cascades. Although different studies evaluated the use of progesterone for preterm birth, the exact effect of which on prolongation of pregnancy remains unclear. Seventy two women who underwent preterm labor were managed by magnesium sulfate. Then they were randomly assigned to continue pregnancy either by applying vaginal progesterone (400 mg) until delivery or without using any drug. Gestational age mean at the time of delivery (P = 0.039) and postponing delivery mean time (P = 0.048) were significantly higher in progesterone group. Comparison of neonatal outcomes between two groups of patients showed meaningful benefits of progesterone in increasing of neonatal weight, reduction of low birth weight babies, and lowing neonate admitted in NICU.