The placenta provides a maternal-fetal exchange interface that maximizes the diffusion of gases, nutrients, and wastes. However, the placenta also may permit diffusion of lipid-soluble steroid hormones that influence processes such as sex-specific fetal development and maternal pregnancy maintenance. In mammals, placental steroid metabolism contributes to regulation of maternal and fetal hormone levels. Such mechanisms may be less highly developed in species that have recently evolved placentation, such as many reptiles. We therefore chose to investigate placental metabolism of steroids in the viviparous lizard Sceloporus jarrovi. In vitro tissue incubations tested the abilities of the chorioallantoic placenta to clear progesterone and corticosterone by converting them to other metabolites and to synthesize progesterone. Placental tissue rapidly cleared progesterone and corticosterone added to the incubation media, indicating that the tissue had converted the steroids to other products. Placental tissue also synthesized substantial concentrations of progesterone from the prohormone pregnenolone. Thus, even in a species with a simple, recently evolved placenta, steroid metabolism appears to be highly developed and could be critical for regulation of maternal and fetal hormone levels. This finding suggests that placental hormone metabolism may be critical to the successful evolution of placentation.