Endometriosis is the most common cause of pelvic pain and affects an estimated 5 million women in the US. The biologically active estrogen estradiol (E2) is the best-defined mitogen for the growth and inflammation processes in the ectopic endometriotic tissue that commonly resides on the pelvic organs. Progesterone and progestins may relieve pain by limiting growth and inflammation in endometriosis but a portion of patients with endometriosis and pelvic pain do not respond to treatment with progestins. Moreover, progesterone-induced molecular changes in the eutopic (intrauterine) endometrial tissue of women with endometriosis are either blunted or undetectable. These in vivo observations are indicative of resistance to progesterone action in endometriosis. The molecular basis of progesterone resistance in endometriosis may be related to an overall reduction in the levels of progesterone receptors (PRs) and the lack of the PR isoform named progesterone receptor B (PR-B). In normal endometrium, progesterone acts on stromal cells to induce secretion of paracrine factor(s). These unknown factor(s) act on neighboring epithelial cells to induce the expression of the enzyme 17beta-hydroxysteroid dehydrogenase type 2 (17beta-HSD-2), which metabolizes the biologically active estrogen E2 to estrone (E1). In endometriotic tissue, progesterone does not induce epithelial 17beta-HSD-2 expression due to a defect in stromal cells. The inability of endometriotic stromal cells to produce progesterone-induced paracrine factors that stimulate 17beta-HSD-2 may be due to the lack of PR-B and very low levels of progesterone receptor A (PR-A) observed in vivo in endometriotic tissue. The end result is deficient metabolism of E2 in endometriosis giving rise to high local concentrations of this local mitogen. The cellular and molecular mechanisms underlying progesterone resistance and failure to metabolize E2 in endometriosis are reviewed.