Mouse epidermal keratinocytes (MK cells) were grown as replicating subcultures at clonal density, in a serum-free, low calcium basal medium supplemented with seven different growth factors (Bertolero et al., Exp. Cell. Res. 155:64-80, 1984). This serum-free system was used to investigate the activity of fetal bovine serum (FBS) and of serum-derived factors on the growth and differentiation of MK cells. Unfractionated, whole FBS inhibited growth and induced terminal differentiation of normal MK cells. The growth inhibitory activity was considerably reduced by passing whole FBS over a resin (Chelex) to remove Ca2+ and other di- and trivalent cations. It is not known whether this treatment removed other factors. Addition of individual serum components either stimulated or inhibited cell-growth and differentiation. Fetuin, a major alpha-globulin of FBS, and high density lipoprotein strongly inhibited the colony forming efficiency (CFE) of MK cells, whereas bovine serum albumin increased the CFE 4.5-fold and stimulated the growth rate as well. The addition of impure commercial preparations of platelet-derived growth factor inhibited the CFE and induced the morphological features of squamous terminally-differentiating keratinocytes. As reported in other systems, transforming growth factor beta (TGF-beta) inhibited the growth of secondary keratinocytes in a dose-dependent manner. Thus, at least three factors present in FBS inhibited growth whereas others were stimulatory. These observations explain the difficulties in obtaining replicating subcultures of mouse keratinocytes in serum-supplemented media and emphasize the importance of a serum-free system for studies on growth control and carcinogenesis in keratinocytes.