Ovarian granulosa cells from small antral follicles from immature rats were cultured in a serum-free medium on an extracellular matrix for 10 days with growth factors in an effort to simulate the metabolic states they experience during their differentiation. During in vivo differentiation granulosa cells are initially quiescent, later proliferate and subsequently commence differentiation. With the production of androstenedione by the vascularized theca interna they produce estrogen and when the follicle reaches the preovulatory stage, granulosa cells produce both estrogen and progesterone. Culturing granulosa cells in serum-free medium plus FSH, PDGF, or FSH plus PDGF, the cells remain quiescent. The cells proliferate most consistently (as assessed by DNA quantitation) when cultured in FSH, PDGF, TGF alpha, TGF beta and GH, and undergo the first level of differentiation by producing estrogen (assessed by RIA) when cultured in FSH, PDGF, TGF beta, IGF-I and delta 4-A. Further differentiation is achieved in the presence of FSH, PDGF, TGF alpha, bFGF and delta 4-A when the cells produce both estrogen and progesterone similar to their production in preovulatory follicles. Phase contrast photomicrographs were made to monitor cellular shape changes. Electron microscopic analysis of the quiescent and proliferative cells reveal them to contain the normally occurring organelles. After 8 days in culture, cells producing estrogen, and estrogen and progesterone, contain endoplasmic reticulum of the smooth variety, an organelle which, in cooperation with mitochondria, is known to be involved in the production of steroids such as estrogen and progesterone. Therefore, with the addition of one or more growth factors and androstenedione to FSH-containing serum free medium, the simulated conditions are partially reminiscent of the follicular microenvironment, in which granulosa cells cultured on extracellular matrix can exhibit characteristics of growth and differentiation similar to folliculogenesis.