We propose that hormones produced during pregnancy down regulate the local maternal immune response against paternal foreign transplantation antigens present on the fetus and trophoblast, thereby allowing the fetus to elude graft rejection. Progesterone, in concentrations produced locally at the placental maternal interface, is the key hormone in this process. It has demonstrable immunosuppressive properties including: 1) anti-inflammatory and graft-sparing effects when administered locally in animals; 2) inhibition of human and murine lymphocyte activation and the generation of killer T lymphocytes; 3) restriction of human monocyte-macrophage oxygen radical production and oxygen consumption, and 4) effects on cellular ingress into the uterus. Although some of these properties are shared with other sex steroids, and with glucocorticoids, it is the selective high concentration of progesterone in the placenta that affords immunosuppression. Whether these effects require participation of classic hormone receptor mechanisms is uncertain. We do not exclude other progesterone actions such as induction of specific uterine proteins that have essential immunosuppressive actions, especially in early pregnancy. Indeed, our main focus for further research is directed toward uterine rather than systemic effects of progesterone and other hormones.