Insulin-like growth factor-1 (IGF1) has been reported to stimulate hair elongation and to facilitate maintenance of the hair follicle in anagen phase. However, little is known about IGF1 signaling in the hair follicle. In this study we investigate the effects of IGF1, glucocorticoids, and retinoids on dermal papilla (DP) cell production of insulin-like growth factor binding proteins (IGFBPs). IGFBPs comprise a family of IGF binding proteins that are produced and released by most cell types. They bind to IGFs to either enhance or inhibit IGF activity. In the present report we identify IGFBP-3 as being produced and released by cultured human dermal papilla (DP) cells. IGFBP-3 levels are increased fivefold by retinoic acid, eightfold by dexamethasone, and tenfold by IGF1. DP cells are known to produce IGF1, and so the observed stimulation of DP cell IGFBP-3 production by IGF1 is consistent with the idea that DP cells possess the IGF transmembrane receptor kinase and are autoregulated by IGFs. The level of another IGFBP, tentatively identified as IGFBP-2, is, in contrast, not regulated by these agents. IGFBP-3 has been shown to inhibit the activity of IGFs in a variety of systems. Our results are consistent with a model in which retinoids and glucocorticoids inhibit IGF action on DP cells and surrounding matrix cells by stimulating increased DP cell production of IGFBP-3. The IGFBP-3, in turn, forms a complex with free IGF1 to reduce the concentration of IGF1 available to stimulate hair elongation and maintenance of anagen phase.