Over the past decade, birds have proven to be excellent models to study hormone-mediated maternal effects in an evolutionary framework. Almost all these studies focus on the function of maternal steroid hormones for offspring development, but lack of knowledge about the underlying mechanisms hampers further progress. We discuss several hypotheses concerning these mechanisms, point out their relevance for ecological and evolutionary interpretations, and review the relevant data. We first examine whether maternal hormones can accumulate in the egg independently of changes in hormone concentrations in the maternal circulation. This is important for Darwinian selection and female physiological trade-offs, and possible mechanisms for hormone accumulation in the egg, which may differ among hormones, are reviewed. Although independent regulation of plasma and yolk concentrations of hormones is conceivable, the data are as yet inconclusive for ovarian hormones. Next, we discuss embryonic utilization of maternal steroids, since enzyme and receptor systems in the embryo may have coevolved with maternal effect mechanisms in the mother. We consider dose-response relationships and action pathways of androgens and argue that these considerations may help to explain the apparent lack of interference of maternal steroids with sexual differentiation. Finally, we discuss mechanisms underlying the pleiotropic actions of maternal steroids, since linked effects may influence the coevolution of parent and offspring traits, owing to their role in the mediation of physiological trade-offs. Possible mechanisms here are interactions with other hormonal systems in the embryo. We urge endocrinologists to embark on suggested mechanistic studies and behavioural ecologists to adjust their interpretations to accommodate the current knowledge of mechanisms.