The relationship between FSH-induced acquisition of LH/hCG receptors and the steroidogenic capacity of granulosa cells from estrogen-primed hypophysectomized rat ovaries has been examined. Granulosa cells harvested from the immature preantral follicles of animals not treated with FSH (controls) displayed negligible specific human [125I]iodo-hCG binding and produced only minimal amounts of progesterone during 48 h of culture in vitro. Addition of highly purified hFSH or prostaglandin-E2 (PGE2) to the culture medium elicited substantial increases in progesterone production which were not accompanied by measurable increases in [125I]iodo-hCG binding. Treatment with oFSH in vivo for 24 h led to the initiation of antrum formation in many follicles and was accompanied by an 8-10-fold increase in hCG binding by freshly isolated granulosa cells. Basal, hFSH-, and PGE2-stimulated progesterone production during culture was also greater than controls. In contrast, cells from animals receiving oFSH in vivo for only 12 h showed no increase in hCG binding either before or after culture, yet basal and stimulated progesterone production in vitro was significantly greater than controls, indicating that the initiation of steroidogenesis was antecedent to LH/hCG receptor induction. Only those cells obtained after the 24-h in vivo treatment with oFSH produced elevated amounts of progesterone when incubated in the presence of hCG, thereby showing that the observed increases in [125I]iodo-hCG binding reflected the induction of functionally active LH/hCG receptors. Pharmacological stimulation of steroidogenesis by cell suspensions with N,O'-dibutyryl cAMP resulted in consistently high levels of progesterone production irrespective of previous treatment with FSH in vivo. This uniform expression of in vitro steroidogenic capacity occurred in the complete absence of measurable increases in LH/hCG receptors, suggesting that these two fundamental developmental processes are independent phenomena which may be under separate regulation in vivo.