The mechanism by which luteinizing hormone (LH) promotes the production of testosterone in Leydig cells by binding to its high affinity sites was reinvestigated. Collagenase dispersed interstitial cells when purified by the application of a variety of techniques such as unit gravity sedimentation, gradient centrifugation, and a combination of the two procedures, were separated into two LH/hCG responsive cell fractions. The two types of interstitial cells displayed distinct biochemical and morphological characteristics. One cell type (the light cell) bound 125I-labeled human chorionic gonadotropin (125I-labeled hCG) with high affinity (Ka approximately equal to 3.33 x 10(9) M-1) but testosterone was not produced by this cell type as a result of hCG target cell receptor interaction. On the other hand, hCG stimulated the production of testosterone in another cell type (the dark/heavier cell). Steroidogenesis was maximally stimulated (700-800 percent over basal) by concentrations of hCG in the range of 3 x 10(-10) M, but high affinity binding sites for 125I-labeled hCG were not detectable. The residual binding that occurred did not obey saturation kinetics and was predominantly nonspecific. The stimulation of steroidogenesis by hCG in dark/heavier cells was dose and time dependent. Addition of dibutyryl or bromo cAMP (1 mM) to the cell suspension resulted in production of testosterone demonstrating the involvement of an hCG sensitive adenylate cyclase system in the transfer signaling process. These observations suggest the lack of a direct association between the occupancy of high affinity binding sites by hCG and testosterone production in rat Leydig cells. The stimulation of a biological response by a pathway independent of hCG occupancy of high affinity binding sites on Leydig cell is discussed and morphology of light and dark/heavier cells is presented. Autoradiographic evidence substantiates the conclusions.