We have recently observed that attomolar concentration of exogenously added TGF beta, a molecule structurally related to inhibin, can stimulate the basal secretion of FSH in a pituitary cell culture. Inhibin purified from porcine follicular fluid antagonizes this activity of TGF beta. To understand further the homeostatic regulatory properties of inhibin and TGF beta we have investigated whether the aromatase activity of ovarian granulosa cells is also subject to intra-ovarian modulation by these peptides. Granulosa cells from immature hypophysectomized diethylstilbestrol-treated rats were cultured for 2 days with androstenedione (10(-7) M) as a substrate, oFSH (2 ng), and different amounts of TGF beta or inhibin. Basal estrogen secretion was negligible and remained unaffected by treatment with purified TGF beta or inhibin (10 ng/ml), whereas treatment with oFSH (2 ng/ml) produced a 100-fold increase in estrogen accumulation. The concurrent application of increasing concentrations (10 pg-10 ng/ml) of TGF beta produced dose-dependent increments in the FSH-stimulated accumulation of estrogen with a ED50 of 0.3 +/- 0.02 ng/ml. On the other hand, concurrent incubation of FSH with inhibin ranging from 10 pg to 10 ng/ml decreases the FSH-mediated estrogen secretion. TGF beta antagonizes the inhibition of inhibin on aromatase activity. These findings suggest that inhibin and TGF beta, two closely related molecules, play novel and opposite roles in modulating the follicular functions.