Oestradiol-17β (Oe2) stimulates uterine epithelial cell proliferation and is critical for normal uterine differentiation and secretory function. Oe2 can act directly on the epithelium via the epithelial oestrogen receptor (OR) or indirectly via the OR-positive underlying stroma. A primary role for epithelial–stromal interactions has been established for mediating steroid hormone action in the uterus. This study was undertaken to determine the mode of Oe2 action in regulating epithelial cell cytokine release in the uterus. Mouse uterine epithelial and stromal cells were isolated and cultured separately. Transepithelial resistance (TER) was monitored with an EVOM voltohmmeter to determine monolayer polarity and integrity. Epithelial cells grown alone or in coculture with stromal cells were treated with Oe2. Supernatants collected were assayed for transforming growth factor-β (TGF-β) and tumour necrosis factor-α (TNF-α) by bioassay and enzyme-linked immunosorbent assay, respectively. While Oe2 treatment of epithelial cells led to a significant decrease in TER, the amount of TNF-α released was not altered. However, when epithelial cells were cocultured with stromal cells and treated with Oe2, apical TNF-α release was significantly decreased, compared to cells not treated with hormone. As determined by oestrogen receptor antagonist studies, Oe2 primed epithelial cells for the action of the stromal paracrine factor(s). In contrast, TGF-β release by epithelial cells was not affected by Oe2 when grown alone or in the presence of stromal cells. These studies indicate that Oe2 has both direct and indirect effects on the uterine epithelium. While epithelial monolayer integrity is directly influenced by Oe2, TNF-α release in response to Oe2 is dependent on the presence of stromal cells, indicating that paracrine communication is necessary for steroid regulation of some but not all cytokines.