The effect of PRL on ovarian steroidogenesis was studied in cultured granulosa cells isolated from follicles of mature cycling rats on the morning of proestrus. Ovine PRL 10-1000 ng/ml) inhibited estradiol production but stimulated progesterone biosynthesis in a dose-dependent manner. The effect of PRL was most prominent after 4 days of culture: 1000 ng/ml PRL suppressed estradiol production by 80% but increased progesterone synthesis by 290%, whereas the lower dose of 10 ng/ml inhibited estrogen secretion by 20% without altering progesterone synthesis. The divergent effect of PRL was not shown to be species specific, since ovine, rat and human PRL had similar effects. Using increasing concentrations of androstenedione (the aromatase substrate), estrogen secretion remained suppressed and progesterone production was stimulated by PRL. FSH stimulated both estrogen and progesterone production. The FSH-induced increased in estrogen production was inhibited by concomitant treatment with PRL. In contrast, PRL and FSH had an additive action in stimulating progesterone production. Although LH alone had no effect on steroidogenesis, concomitant treatment with LH and PRL resulted in a stimulation of progesterone production that was additive. This study demonstrates that PRL acts directly on granulosa cells of Graafian follicles of adult cycling rats to stimulate the secretion of progesterone and to suppress estradiol production.