Progesterone is synthesized in the nervous system by neurons and glial cells. Because of their simple structure, plasticity and capacity of regeneration, peripheral nerves are particularly well suited for studying the biosynthesis, mechanisms of action and effects of the hormone. Schwann cells, the myelinating glial cells in the peripheral nervous system, synthesize progesterone in response to a diffusible neuronal signal. In peripheral nerves, the local synthesis of progesterone plays an important role in the formation of myelin sheaths. This has been shown in vivo, after cryolesion of the mouse sciatic nerve, and in vitro, in cocultures of Schwann cells and sensory neurons. Schwann cells also express an intracellular receptor for progesterone, which thus functions as an autocrine signalling molecule. Progesterone may promote myelination by activating the expression of genes coding for transcription factors (Krox-20) and/or for myelin proteins (P0, PMP22). Recently, it has been proposed that progesterone may indirectly regulate myelin formation by influencing gene expression in neurons. Steroid hormones also influence the proliferation of Schwann cells: estradiol becomes a potent mitogen for Schwann cells when levels of cAMP are elevated and glucocorticosteroids have been shown to increase the mitogenic effects of peptide growth factors.