Epithelial ovarian carcinoma is the most lethal gynecological cancer. However, little is known about the molecular mechanisms underlying the disease development and progression. In this study, we found that the expression of pigment epithelium-derived factor (PEDF) was greatly reduced in ovarian tumors and in ovarian cancer cell lines when compared with their normal precursor, ovarian surface epithelium (OSE). In addition, we showed that exogenous PEDF inhibited the growth of cultured human OSE as well as ovarian cancer cell lines, whereas targeted inhibition of endogenous PEDF using small interfering RNA or neutralizing PEDF antibody promoted the growth of these cells, confirming that the growth inhibitory effect was PEDF specific. We also report for the first time that estrogen is an important upstream regulator of PEDF in human OSE. Treatment of the cultured cells with 17-estradiol (E₂) inhibited the expression of PEDF protein and mRNA in a dose- and time-dependent manner, which could be reversed by the specific estrogen receptor (ER) antagonist, ICI 182,780, indicating that the regulation was ER-mediated. We further showed that this down-regulation of PEDF gene transcription was a direct, primary, effect of E₂. E₂ promoted OSE and ovarian cancer cell growth while simultaneous treatment with E₂ and PEDF abrogated the estrogenic growth stimulation of these cells. This study is the first to demonstrate a role of PEDF in OSE biology and ovarian cancer and suggests that the loss of PEDF may be of relevance in carcinogenesis.