A large number of intercellular signaling molecules have been identified that orchestrate female reproductive physiology. However, with the exception of steroid hormone receptors, little information exists about the transcriptional regulators that mediate cellular responses to these signals. The transcription factor C/EBPβ (CCAAT/enhancer-bindingprotein β) is expressed in ovaries and testes, as well as many other tissues of adult mice. Here we show that mice carrying a targeted deletion of the C/EBPβ gene exhibit reproductive defects. Although these animals develop normally and males are fertile, adult females are sterile. Transplantation of normal ovaries into mutant females restored fertility, thus localizing the primary reproductive defect to the ovary proper. In normal ovaries, C/EBPβ mRNA is specifically induced by luteinizing hormone (LH/hCG) in the granulosa layer of preovulatory antral follicles. C/EBPβ-deficient ovaries lack corpora lutea and fail to down-regulate expression of the prostaglandin endoperoxidase synthase 2 and P450 aromatase genes in response to gonadotropins. These findings demonstrate that C/EBPβ is essential for periovulatory granulosa cell differentiation in response to LH. C/EBPβ is thus established as a critical downstream target of G-protein-coupled LH receptor signaling and one of the first transcription factors, other than steroid hormone receptors, known to be required for ovarian follicle development in vivo.