Lefty/Ebaf polypeptides, novel members of the TGF-β superfamily, are involved in endometrial differentiation and embryo implantation. Recently, we showed that, during undisturbed estrous cycle, lefty is present in mouse uterine horn primarily in a precursor form. Here, we show that decidual differentiation of endometrial stroma leads to increased lefty (∼3.1- to 3.6-fold in vivo and 5- to 8-fold in vitro) and processing of its precursor primarily to its long form. This event occurs on d 5 of pregnancy, and is paralleled by proprotein convertase (PC)5/6 up-regulation (∼6-fold increase for PC5A and 3-fold increase for PC5B) in decidualized uterine horn, independent of embryo implantation. Among the known convertases, only PC5/6A processes lefty to its long form. Taken together, the findings show that decidualized differentiation of stroma, which is a prerequisite for embryo implantation, leads to processing of lefty by PC5/6A.