The objectives of this study were to develop a serum-free bovine granulosa cell culture system in which FSH-responsive estradiol production could be induced and maintained, and to use this system to evaluate the effects of FSH, insulin, and IGF-I on steroidogenesis and proliferation of bovine granulosa cells from different follicle size categories (< 4-, 4-8, and > 8-mm diameter). In the presence of FSH, granulosa cells from small follicles differentiated in vitro, and estradiol secretion increased with time (p < 0.01) so that by the end of the culture period it was similar to that of cells from large follicles. Granulosa cells from medium and large follicles secreted estradiol throughout the culture period. Cells cultured in plasma-coated culture wells had an increased proliferative response but had lower estradiol production compared to cells cultured under serum-free conditions (p < 0.01). Insulin promoted proliferation and estradiol production by granulosa cells from the three follicle-size categories (p < 0.01). Physiological concentrations of FSH induced proliferation and estradiol secretion (p < 0.01) by granulosa cells in a dose-responsive manner. The inclusion of IGF-I in the culture system enhanced proliferation and estradiol production (p < 0.01), even in the absence of gonadotropic support, demonstrating the gonadotropic characteristics of this growth factor. These results demonstrate the development of a relevant physiological culture system for bovine granulosa cells. This system will permit the detailed study of the key factors controlling the differentiation and proliferation of bovine granulosa cells.