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The spongy zone (SZ) syncytiotrophoblast has been identified as the principal site of progesterone synthesis in the placenta of the guinea-pig. This was evident from the relatively large amounts of progesterone synthesized by the SZ from [7-³H]pregnenolone and the exact correlation of SZ development and the estimated progesterone secretory activity of the placenta throughout gestation. Placental progesterone secretion started between days 20–25 of gestation when the SZ was being formed. Progesterone secretion rose to a maximum by day 30 and was maintained until at least day 53, reflecting the large amount of SZ tissue present in the placenta during this period. Secretory activity decreased simultaneously with the decrease in SZ tissue, even though a decrease in progesterone concentration in systemic plasma was not evident. The results also suggested that the yolk sac was able to synthesize progesterone and metabolize steroids in vitro. Small quantities of 5-saturated C₂₁ steroids were also synthesized by the placenta.