Neurosteroids, such as progesterone, influence central nervous system development and function by regulating a broad spectrum of physiological processes. Here, we investigated membrane-initiated actions of progesterone in the retina and identified the membrane-associated progesterone receptor component 1 (PGRMC1). We found PGRMC1 expressed mainly in retinal Muller glia (RMG) and retinal pigment epithelium, and localized uniquely to microsomal and plasma membrane fractions. In RMG, membrane-impermeable progesterone conjugate induced calcium influx and subsequent phosphatidylinositol 3-kinase-mediated phosphorylation of PKC and ERK-1/2. Induction by progesterone also led to PKC-dependent activation of VEGF gene expression and protein synthesis, suggesting a contribution of membrane-initiated hormone effects to VEGF induced neovascularization within retina.