Progesterone production of granulosa cells cultured in vitro is stimulated and cell differentiation increased, by follicle-stimulating hormone (FSH). This study examined whether the increased progesterone production observed when bovine granulosa cells are cultured occurs because (1) progesterone production by undifferentiated and/or differentiated cells is increased or (2) the differentiation of granulosa cells is stimulated. Viable bovine granulosa cells (2-3 X 10(5)) from follicles 5-8 mm in diameter were cultured in the presence of 0, 1, 10 and 100 mu u FSH (1 mu u = 1 mu g NIH-FSH-S1) for 6 days at 37 degrees C in a humidified atmosphere of 5% CO2 in air in 1 mi of a 1:1 mixture of Dulbecco's modified Eagle medium: Ham's F10 medium supplemented with 365 mu g ml(-1) L-glutamine, 100 U ml(-1) penicillin and 100 mu g ml(-1) streptomycin. Progesterone production, total DNA and protein, and cell diameter were determined sequentially over the culture period. The increases in progesterone production(ng mu g(-1) DNA per 24 h), cytoplasmic:nuclear ratio (mu g protein mu g(-1) DNA) and cell diameter (mu m) over 6 days culture indicated that granulosa cells underwent differentiation in the presence of FSH. Progesterone production of undifferentiated granulosa cells (diameter 14 mu m or less) was stimulated by FSH (P < 0.01) in a dose dependent manner (1.0 +/- 0.2, 2.9 +/- 0.3, 3.7 +/- 0.3 and 4.9 +/- 0.4 ng mu g(-1) DNA per 24 h for 0, 1, 10 and 100 mu u ml(-1) FSH respectively) but remained constant within dose (P > 0.05) during a 6 day culture period. FSH stimulated (P < 0.05) the rate of granulosa cell differentiation (10 +/- 3%, 53 +/- 13%, 74 +/- 21% and 82 +/- 10% differentiating cells per well for 0 mu u, 1 mu u, 10 mu u and 100 mu u ml(-1) FSH respectively) but did not stimulate (P > 0.05) progesterone production by differentiating granulosa cells (8.7 +/- 0.5 ng mu g(-1) DNA per 24 h). In conclusion, the increase in progesterone production of FSH-stimulated granulosa cells cultured in vitro appears to be mainly due to an increase in the number of differentiating cells with a constant rather than an increasing progesterone production per cell.