The effect of insulin on the function of rat luteal cells in monolayer culture was examined. Cells were obtained from PMSG-hCG primed immature rats and further cultured in serum free medium with or without insulin. The hormone produced an increase of progesterone production and maximal stimulation was achieved at 0.2 nM of insulin (100% stimulation). This effect was enhanced by addition of methyl-isobutyl-xantine (MIX 0.1 mM) to the culture medium. However, the stimulation produced by LH was not augmented by the presence of insulin. The conversion of progesterone into 20 alpha-hydroxy-progesterone was also enhanced after insulin treatment. Luteal cells were also cultured in the presence of 25-hydroxy-cholesterol (10 micrograms/ml). In these conditions insulin produced a 2-fold increase in progesterone production. Aromatase activity was assessed by adding androstenedione (0.25 microM) as substrate. Insulin produced a 14-fold stimulation of estradiol production after 24 h of culture. Insulin action was tested in short time incubations of luteal cells in a glucose free medium, in these experiments the hormone was able to induce a significant increase in progesterone and 20 alpha-hydroxy-progesterone production. These data suggest that luteal cell function is regulated by insulin and that this hormone has a direct effect on the steroidogenic process.