End buds from 4- to 5-week-old rat mammary glands were isolated and cultured within a rat tail tendon collagen gel matrix. Media containing equine serum or porcine serum and cholera toxin promoted growth, but not the production of casein or thioesterase II, nor did they induce a state of differentiation as assessed by cell ultrastructure. Medium supplemented with only 5% porcine serum, insulin and cholera toxin did not support growth or differentiation. However, when prolactin, estradiol, progesterone and hydrocortisone were added to this medium, growth was stimulated greatly and a differentiated state was induced as assessed by the production of casein and thioesterase and by the appearance of a highly secretory ultrastructure.