The assembly of progesterone receptor (PR) heterocomplexes in vitro involves at least eight components of the molecular chaperone machinery, and as earlier reports have shown, these proteins exhibit complex, dynamic, but ordered, interactions with one another and PR. Using the selective hsp90 binding agent geldanamycin (GA), we have found that PR assembly in vitro can be arrested at a previously observed intermediate assembly step. Like mature PR complexes, the intermediate complexes contain hsp90, but they differ from mature complexes by the presence of hsp70, p60, and p48 and the absence of immunophilins and p23. Arrest of PR assembly is likely due to GA's ability to directly block binding of p23 to hsp90. An important functional consequence of GA-mediated assembly arrest in vitro is the inability of the resulting PR complexes to bind progesterone, despite the presence of hsp90 in the receptor complexes. The biological significance of the in vitro observations is demonstrated by GA's ability to (i) rapidly block PR's hormone binding capacity in intact cells and (ii) alter the composition of COS cell PR complexes in a manner similar to that observed during in vitro reconstitutions. An updated model for the cyclic assembly pathway of PR complexes that incorporates the present findings with earlier results is presented.