A cell-free system was used to examine heat shock protein 90 (hsp90)-progesterone receptor (PR) binding at near physiological conditions. Four major findings are presented: 1) hsp90 is required to maintain ligand binding by PR at elevated temperatures; 2) hsp70 and heat shock-related protein p60 are components of an intermediate assembly complex that precedes formation of a mature hsp90-PR complex; 3) hsp90-PR complexes are in a steady state assembly/disassembly cycle (t1/2, 5 min); and 4) hsp90 dissociation is not accelerated after progesterone binding; instead, progesterone prevents PR from forming hsp70-mediated assembly complexes. A model incorporating these findings is presented in which unliganded PR is maintained in a disactivation loop of assembly/disassembly with hsp90; hormone binding releases PR from this loop to proceed along an activation pathway.