The process of endometrial decidualization is a key event with direct relevance to very early pregnancy as well as subsequent pregnancy outcome. This chapter reviews the signals and pathways that control the morphological and biochemical differentiation of resident endometrial fibroblasts into secretory decidual cells. It discusses the functions of these cells at the feto-maternal interface. Decidual transformation of endometrial stromal cells can be faithfully recapitulated in culture and these in vitro studies have yielded invaluable insights into the signal pathways and downstream transcription factors that govern this differentiation process. Decidualizing stromal cells play an important role in local immunomodulation in many ways. The emergence in human beings of a cyclic decidual process has several major clinical implications; the most obvious of which is menstruation and its associated disorders. Decidualizing stromal cells and other cellular components in the superficial endometrial layer take part in menstrual shedding.