We have investigated the degradation of 125I-labeled rat and human lipoproteins by rat ovary granulosa cells cultured in serum-free medium. The granulosa cells degrade rat [125I]iodo high density lipoprotein (HDL) to acid-soluble products, mainly monoiodotyrosine. The degradation of 125I-labeled rat HDL is a specific, saturable, high affinity (Km = 21 micrograms protein/ml) process. In studies of rat [125I]iodo-HDL degradation and progestin (progesterone plus 20 alpha-dihydroprogesterone) production by the same granulosa cell cultures, the cholesterol potentially made available to the cells by degradation can account for the majority of the substrate necessary for the increased progestin production. Granulosa cells degrade human [125I]iodo-HDL by a specific, saturable, high affinity (Km = 20 micrograms protein/ml) process. The degradation of human [125I]iodo-HDL can account for only 20% of the cholesterol substrate necessary for increased progestin production. The degradation of human [125I]iodo-low density lipoprotein (LDL) is saturable and a high affinity (Km = 8 micrograms protein/ml) process, but can be inhibited significantly by a 10-fold excess of unlabeled human HDL. In contrast to both rat [125I]iodo-HDL and human [125I]iodo-HDL, the degradation of human [125I]iodo-LDL can potentially provide twice the cholesterol necessary for increased progestin production. Pronase treatment of the granulosa cells inhibits human [125I]iodo-LDL degradation but stimulates rat [125I]iodo-HDL degradation, indicating that the mechanisms of degradation are separate. The data demonstrate that cultured rat ovary granulosa cells degrade rat HDL, human HDL, and human LDL, and this process has the potential for providing cholesterol for cellular steroid hormone synthesis.