To test the hypothesis that uterine decidua may modulate trophoblast function, trophoblasts and decidual cells were isolated from term placentas by enzymatic digestion and Percoll gradient centrifugation. Placental trophoblasts were cocultured with decidual cells and trophoblasts or JEG-3 choriocarcinoma cells were incubated with medium conditioned by decidual cells (DCM) for 72-96 h. In cocultures decidual cells inhibited choriogonadotropin (hCG) release from trophoblasts by 75% in comparison with controls (P < 0.001). The DCM contained a factor that markedly inhibited hCG release from trophoblasts and JEG cells in vitro compared with controls. The inhibitory effect of the factor on hCG release was dose dependent, and could be eliminated by boiling the DCM for 30 min or proteolytic enzyme treatment. Ultrafiltration and Sephadex G-50 fractionation of the DCM indicated that the apparent molecular mass was 7,000-10,000 D. DCM also inhibited the stimulatory effect of exogenous cAMP on hCG secretion by JEG-3 cells, suggesting that DCM may interfere with activation of the cAMP-dependent protein kinases or transcription of hCG genes. These results suggest that the release of trophoblast hCG is under local paracrine control, regulated in part by a protein released by decidual cells.