Adaptive changes that occur in islets of Langerhans during pregnancy include enhanced insulin secretion, insulin synthesis, beta-cell proliferation, gap-junctional coupling among beta-cells, and glucose oxidation. We have determined that elevated lactogenic activity is directly responsible for these changes in beta-cell function. Recently, we showed that two of the principal adaptive characteristics (insulin secretion and beta-cell proliferation) of rat pregnancy peaked on day 15 and returned to control levels by day 20. As placental lactogen remains elevated during late gestation, it was of interest to determine whether pregnancy steroids could reverse the effects of lactogen on islets. In this study, rat islets were cultured with progesterone, estradiol, rat PRL (rPRL), or combinations of these hormones (progesterone and rPRL, estradiol and rPRL, or progesterone and estradiol and rPRL). Insulin secretion was examined for 8 days, and beta-cell proliferation by 2-bromo-5'-deoxyuridine (BrdU) incorporation on days 4 and 8. rPRL treatment resulted in a time-dependent increase in insulin secretion that was 3-fold greater than that from control islets by day 8. Progesterone and estradiol had minimal effects on insulin secretion. Estradiol had no effect on the increased insulin secretion observed with rPRL during the first 6 days and a small inhibitory effect on days 7 and 8. Although progesterone treatment had no effect on the increased insulin secretion induced by rPRL during the first 3 days, it subsequently resulted in a decline in insulin secretion to that from control islets. The combination of progesterone and estradiol was more effective than either steroid by itself in reversing the effects of rPRL on insulin secretion. Similar results were obtained in the BrdU labeling experiments: 1) a 7-fold increase in the number of BrdU-labeled nuclei per islet was observed after culture in the presence of rPRL; and 2) estradiol had a small inhibitory effect on the increased BrdU labeling observed with rPRL; however, 3) progesterone completely reversed the effect of rPRL on islet beta-cell division. These results demonstrate that progesterone counterregulates the effects of PRL on insulin secretion and islet beta-cell division. The temporal changes observed in islets in vitro under the influence of PRL and progesterone mimic those seen in islets during pregnancy. We conclude that progesterone, which increases in the later stages of gestation, is the primary hormone responsible for counteracting the stimulatory effects of elevated lactogenic activity on islets during late pregnancy.