Transforming growth factor-beta (TGF-beta) is an important regulator of placental development and function. In this study, we have investigated the effect of TGF-beta1 on steroidogenesis, as well as its sites of action in the steroidogenic pathway by using a choriocarcinoma cell line, JEG-3, and a normal trophoblast cell line (NPC). The effect of TGF-beta1 on progesterone and estradiol production was evaluated in the absence or presence of a membrane-permeable analogue of cholesterol and some intermediate substrates of steroidogenic enzymes. The effect of TGF-beta1 on P450 aromatase (P450arom) mRNA levels was determined by Northern blot analysis. TGF-beta1 significantly decreased progesterone production in both NPC and JEG-3 cells. The inhibitory effect of TGF-beta1 on progesterone production was reversed by addition of 22R-hydroxycholesterol, a membrane-permeable analogue of cholesterol, or pregnenolone. In JEG-3 cells, TGF-beta1 also inhibited estradiol production when androstenedione, but not estrone, was added to the culture. Estradiol production was too low to be detected in NPC cells. Treatment with TGF-beta1 also suppressed aromatase mRNA levels. This study has demonstrated that TGF-beta1 inhibits progesterone and estradiol production by trophoblast cells, and that the sites of TGF-beta1 action on progesterone and estradiol production are likely to be cholesterol transport and P450arom respectively.