Growth hormone (GH) plays a role in regulating growth and differentiation of immature glandular structures in the mammary gland, but the mechanisms by which the hormone exerts these effects are unknown. We have previously found that GH stimulates insulin-like growth factor I (IGF-I) I mRNA production within the mammary glands of hypophysectomized rats. In this study we set out to determine if IGF-I administration could mimic the action of GH in initiating mammary gland differentiation and development. Two forms of IGF-I, intact and amino-terminally shortened [des-(1-3)-IGF-I], were found to induce the development of terminal end buds and the formation of alveolar structures in the mammary glands of hypophysectomized, castrated, and estradiol-treated sexually immature male rats. The effect of both forms of IGF-I was similar to that obtained with human GH, but the truncated form was at least 5 times more potent than intact IGF-I. These findings suggest that the inductive effect of GH on glandular differentiation is mediated by the GH-induced production of IGF-I or a related molecule within the mammary gland itself.