The effects of human growth hormone (hGH) on proliferation and differentiation of primary adipocyte precursor cells isolated from rat epididymal fat pads were studied under serum-free culture conditions. hGH markedly reduced the formation of new fat cells and the expression of glycerophosphate dehydrogenase activity, a marker enzyme of adipose differentiation, in a dose-dependent manner. To find an explanation for this inhibitory effect, we investigated the action of GH on (1) cell proliferation and on (2) lipid accumulation, the latter in the absence and presence of corticosterone. In undifferentiated cells, 5 nmol/L hGH increased both cell number and [3H]-thymidine incorporation (1.3- and 2.6-fold over basal, respectively). This effect was mediated by insulin-like growth factor-I (IGF-I), since hGH stimulated IGF-I production in undifferentiated cells by 12-fold and addition of an anti-IGF-I monoclonal antibody (IGF-I MAb) abolished the mitogenic effect of hGH but did not prevent hGH-induced suppression of adipose differentiation. In developing fat cells, hGH significantly reduced cellular 2-deoxyglucose uptake and glucose incorporation into lipids. In addition, hGH exhibited a lipolytic action in the presence of insulin and triiodothyronine. These effects were not prevented by IGF-I MAb. Specific binding of [125I]-hGH to precursor cells increased significantly during adipose conversion. In differentiated cells Scatchard analysis yielded linear plots with an apparent Kd of 0.16 nmol/L and 8,400 sites per cell. Taken together, these data show that hGH reduces adipose conversion in primary cultures of rat adipocyte precursor cells while promoting cell proliferation through an increase in IGF-I production.