To examine the cause of altered follicular fluid steroid levels and lower in vitro fertilization rate observed in infertile women with minor endometriosis, we have compared the production of estradiol (aromatase activity) and progesterone of freshly isolated granulosa cells (3 h. incubation) from such women and a control group with tubal or unexplained infertility, having IVF during unstimulated or gonadotropin-stimulated cycles. As previously observed, mature oocytes from women with endometriosis had a reduced fertilization and cleavage rate ill via vitro in unstimulated cycles (19/37[51%] vs. 69/94[73%], p<0.05) and stimulated cycles (20/37[57%] vs. 32/39[82%], p<0.01). Median [95%CI] basal aromatase activity was lower in endometriosis compared with control in unstimulated cycles (2.84[2.03-3.49] pmol E(2)/10(3) cell/3h, n=31 vs. 3.63[2.72-3.49], n=55, p=0.057) and stimulated cycles (0.31[0.16-0.50], n=14 vs. 0.99[0.70-1.52], n=20, p<0.001). Progesterone production followed a similar pattern in unstimulated (0.56[0.50-0.89] pmol/10(3) cells/3h, n=29 vs. 1.23[0.69-1.54], n=52,) and stimulated (0.37[0.20-0.73], n=16 vs. 0.95[0.72-1.17], n=21) cycles (p<0.05). Addition of FSH, LH or hCG (30ng/mL) to the incubation medium enhanced progesterone production 2 to 3-fold, but had no effect on aromatase activity. Our results indicate a defect in granulosa cell steroidogenesis associated with endometriosis, which could affect oocyte function and explain the reduction in fertilizing capacity and subsequent competence of the corpus luteum, and the associated subfertility.