Differentiated HC-11 cells ectopically expressing progesterone receptor (PR) were used to explore the molecular mechanisms by which progesterone suppresses β-casein gene transcription induced by prolactin (PRL) and glucocorticoids in the mammary gland. As detected by chromatin immunoprecipitation assays, treatment of cells with the progestin agonist R5020 induced a rapid recruitment (5 min) of PR to the proximal promoter (-235 bp) and distal enhancer (-6 kb upstream of transcription start site) of β-casein. PR remained bound for 4 h and was dissociated by 24 h after treatment. Despite efficient binding, the hormone agonist-occupied PR did not stimulate transcription of the β-casein gene. Recruitment of signal transducer and activator of transcription 5a, glucocorticoid receptor, and the CCAAT enhancer binding protein β to the enhancer and proximal promoter of β-casein induced by PRL and glucocorticoids was blocked by progestin cotreatment, whereas PR binding was induced under these conditions. PRL/glucocorticoid-induced histone acetylation and the recruitment of the coactivator p300 and RNA polymerase II required for gene activation were also inhibited by progestin. In addition, progestin prevented dissociation of the corepressors Yin and Yang 1 and histone deacetylase 3 from the promoter, and demethylation of lysine 9 of histone 3 induced by PRL and glucocorticoids. These studies are consistent with the conclusion that progesterone interferes with PRL/glucocorticoid induction of β-casein transcription by a physical interaction of PR with the promoter and enhancer that blocks assembly of a transcriptional activation complex and dissociation of corepressors and promotes repressive chromatin modifications. These studies define a novel mechanism of steroid receptor-mediated transcriptional repression of a physiologically important gene in mammary gland development and differentiation.