COUP‐TFII (Chicken Ovalbumin Upstream Promoter‐Transcription Factor II) is an orphan nuclear receptor that belongs to the nuclear receptor superfamily. Genetic ablation of COUP‐TFII results in early embryonic lethality due to defects in angiogenesis and heart development. COUP‐TFII is expressed in the uterine stroma and is controlled by progesterone‐Ihh‐Ptch signaling. To assess the uterine function of COUP‐TFII, we have ablated COUP‐TFII in the uterine stroma by PR‐Cre. The uterine specific null mutants are infertile and exhibit defects in blastocyst attachment and decidualization. We identified a genetic pathway in which the epithelial Ihh regulates COUP‐TFII to control BMP‐2, which then regulates decidualization. Interestingly, enhanced epithelial estrogen activity, which impedes the maturation of a receptive uterus, was noted in the absence of COUP‐TFII. This finding reveals that COUP‐TFII mediates progesterone signaling to inhibit estrogen activity, and establishes the requirement for epithelia‐stromal interaction during the implantation process. COUP‐TFII is also expressed in the Leydig cells of male mice. Conditional ablation of COUP‐TFII in the male results in infertility due to impairment of spermatogenesis and Leydig cell differentiation. Taken together, COUP‐TFII is a critical player for female and male reproduction.HL 076448, U54 H007495 PJ4, DK 62434