Inflammation is associated in some tissues with diminished responsiveness to steroid hormone action. We hypothesized that proinflammatory cytokines alter steroid hormone sensitivity, in part, by reducing levels of key nuclear receptor coactivators. Treatment of cultured human uterine smooth muscle cells (UtSMC) with TNF‐α significantly reduced mRNA for the coactivators, SRC‐1 (42%, P<0.01) and 2 (47%, P<0.03), and diminished the respective protein levels, but did not significantly alter the mRNAs encoding SRC‐3, CBP and the corepressors, NCoR and SMRT; or progesterone receptor protein levels. To assess TNF‐α effects on steroid hormone‐mediated transcriptional activity, UtSMC were transfected with progesterone receptor B (PR‐B) and a model PRE(2)‐luciferase reporter construct. Transfected UtSMC were treated with progesterone alone or in the presence of TNF‐α, and assayed for luciferase activity. TNF‐α (10 ng/ml) diminished progesterone‐stimulated PR‐B‐mediated transactivation by ~60% (P<0.02). The TNF‐α‐dependent decrease in PRE‐luciferase activity was fully prevented by cotransfection with SRC‐2, and partially prevented with exogenous SRC‐1. In conclusion, TNF‐α impairs progesterone‐stimulated PR‐B‐mediated transactivation, and these effects appear to be due, in part, to reduced expression of SRC‐1 and ‐2, which is a novel mechanism by which inflammation can functionally block steroid hormone action.