The induction of luteinizing hormone (LH) receptor by follicle-stimulating hormone (FSH) in granulosa cells was compared following culture in serum-free or serum-containing medium. Incubation of primary cultures of granulosa cells in serum-free defined medium with purified FSH resulted in dramatic increases in the level of functional LH receptors. This striking enhancement of LH receptor by FSH was completely abolished by concomitant incubation with serum (rat, horse, porcine, human or calf). The serum inhibition of FSH was not readily reversible and could be evoked throughout the culture period. The synthesis of cAMP by FSH was markedly suppressed by serum, suggesting that serum component(s) are inhibiting FSH action at the level of adenylate cyclase. Such an action, however, cannot be the sole mechanism because serum also blocked LH receptor induction by cyclic AMP analogs. In defined medium, addition of insulin, transferrin, dexamethasone or fibronectin alone had no effect on basal levels of LH receptor. However, following incubation with either insulin or dexamethasone, the FSH-induced increases in LH receptor were markedly suppressed. Insulin was found to markedly inhibit FSH-stimulated cyclic AMP formation; this was not the case with dexamethasone. The present results demonstrated the complete inhibition of FSH action by serum in cultured granulosa cells and suggest that the effect is caused by a combination of direct actions of common metabolic hormones which inhibit FSH action at multiple sites. These experiments clearly indicate the obligatory role of defined medium in the hormone-dependent differentiation of the granulosa cell in culture.