The modulation of ovarian steroidogenesis by epidermal growth factor (EGF) was investigated in cultured rat granulosa cells. Granulosa cells, obtained from ovaries of immature, hypophysectomized, estrogen-treated rats, were incubated for 2 days with EGF, follicle-stimulating hormone (FSH), or EGF plus FSH. Treatment with EGF did not affect estrogen production, but stimulated progestin (i.e. progesterone and 20 alpha-hydroxy-pregn-4-en-3-one) production in a dose-dependent manner. Stimulation of progestin production by EGF appears to be the result of an increase in pregnenolone biosynthesis as well as increases in the activities of 20 alpha-hydroxysteroid dehydrogenase and 3 beta-hydroxysteroid dehydrogenase/isomerase. Treatment with FSH increased both estrogen and progestin production by cultured granulosa cells. When cells were treated concomitantly with EGF, FSH-stimulated estrogen production was inhibited, while progestin production was further enhanced. The EGF enhancement of FSH-stimulated progestin production appears to be the result of synergistic increases in pregnenolone biosynthesis and 20 alpha-hydroxysteroid dehydrogenase activity, resulting in substantial increases in 20 alpha-hydroxypregn-4-en-3-one but not progesterone production. The effects of EGF were shown to be time-dependent. The concept of a direct action of EGF on rat granulosa cells is reinforced by the demonstration of high affinity (Kd approximately 3 X 10(-10) M), low capacity (approximately 5,000 sites/cell) EGF binding sites in these cells. Thus, EGF interacts with specific granulosa cell receptors to stimulate progestin but to inhibit estrogen biosynthesis.