Ubiquitin‐specific protease 7 (USP7), a member of the deubiquitinating (DUB) enzyme family, regulates protein stability and has a well‐characterized function in tumorigenesis. Given its critical role in growth and development, it was speculated to be involved in modulating processes in the female reproductive system but its exact role has not been elucidated. Decidualization is one of the key processes in pregnancy and aberrant decidualization is a cause of pregnancy failure. The uterine endometrium layer undergoes significant structural and functional changes during decidualization in preparation for and after embryo implantation. Here, we hypothesized that USP7 could be involved in mediating endometrial stromal cell (ESC) decidualization and set out to determine its function with a primary stromal cell culture. Using in situ hybridization and immunohistochemical techniques, we observed increased USP7 expression during uterine decidualization and found that it was predominantly localized to the decidual zone in the post‐implantation uterus. Since the ovarian hormones, progesterone (P4) and estrogen (E2), function in promoting stroma decidualization, we investigated their relationship with USP7 expression and found that they exert minimal influence. Moreover, increased USP7 expression observed during deciduoma development was found to be independent of blastocyst attachment. Using a specific USP7 inhibitor, HBX19818, we demonstrated an additional novel role for USP7 in endometrial stroma decidualization in mice during early pregnancy. Our findings could potentially be applied towards future research and development in female infertility.