Previously, we demonstrated that bone marrow-derived mesenchymal stem cells (MSCs) differentiate into steroidogenic cells such as Leydig and adrenocortical cells by the introduction of steroidogenic factor-1 (SF-1) and treatment with cAMP. In this study, we employed the same approach to differentiate umbilical cord blood (UCB)-derived MSCs. Despite UCB-MSCs differentiating into steroidogenic cells, they exhibited characteristics of granulosa-luteal-like cells. We found that peroxisome proliferator-activated receptor-gamma coactivator-1alpha (PGC-1alpha) was expressed and further induced by cAMP stimulation in UCB-MSCs. Consistent with these results, tissue-specific expression of Pgc-1alpha was observed in rat ovarian granulosa cells. PGC-1alpha binds to the NR5A family [SF-1 and liver receptor homolog-1 (LRH-1)] of proteins and markedly enhances their transcriptional activities. Reporter assays revealed that PGC-1alpha activated the promoter activities of SF-1 and LRH-1 target genes. Infection of KGN cells (a human cell line derived from granulosa cells) with adenoviruses expressing PGC-1alpha resulted in the induction of steroidogenesis-related genes and stimulation of progesterone production. PGC-1alpha also induced SF-1 and LRH-1, with the latter induced to a greater extent. Knockdown of Pgc-1alpha in cultured rat granulosa cells resulted in attenuation of gene expression as well as progesterone production. Transactivation of the NR5A family by PGC-1alpha was repressed by Dax-1. PGC-1alpha binds to the activation function 2 domain of NR5A proteins via its consensus LXXLL motif. These results indicate that PGC-1alpha is involved in progesterone production in ovarian granulosa cells by potentiating transcriptional activities of the NR5A family proteins.