Both term and preterm parturition are characterized by an influx of macrophages and neutrophils into the myometrium and cervix, with co-incident increased peripheral blood monocyte activation. Infection and inflammation are strongly implicated in the pathology of preterm labour (PTL), with progesterone considered a promising candidate for its prevention or treatment. In this study, we investigated the effect of monocytes on myometrial smooth muscle cell inflammatory cytokine production both alone and in response to LPS, a TLR4 agonist used to trigger PTL in vivo. We also investigated the effect of monocytes on myocyte contraction. Monocytes, isolated from peripheral blood samples from term pregnant women, were cultured alone, or co-cultured with PHM1-41 myometrial smooth muscle cells, for 24 h. In a third set of experiments, PHM1-41 myocytes were cultured for 24 h in isolation. Cytokine secretion was determined by ELISA or multiplex assays. Co-culture of monocytes and myocytes led to synergistic secretion of pro-inflammatory cytokines and chemokines including IL-6, IL-8 and MCP-1, with the secretion being further enhanced by LPS (100 ng/ml). The synergistic secretion of IL-6 and IL-8 from co-cultures was mediated in part by direct cell–cell contact, and by TNF. Conditioned media from co-cultures stimulated contraction of PHM1-41 myocytes, and the effect was inhibited by progesterone. Both progesterone and IL-10 inhibited LPS-stimulated IL-6 and IL-8 secretion from co-cultures, while progesterone also inhibited chemokine secretion. These data suggest that monocytes infiltrating the myometrium at labour participate in crosstalk that potentiates pro-inflammatory cytokine secretion, an effect that is enhanced by LPS, and can augment myocyte contraction. These effects are all partially inhibited by progesterone.