Human granulosa-luteal cells were harvested from preovulatory Graafian follicles at the time of oocyte retrieval for in vitro fertilization after induction of follicle maturation by sequential injections of menopausal gonadotropins and hCG. Such highly differentiated granulosa cells produced large quantities of progesterone basally (6.8 pg/cell X 2 days) in monolayer culture. Human LH significantly increased progesterone biosynthesis after 6, 12, 48, 96, or 144 h in culture, with a maximal increase of 8- to 20-fold occurring at 96 h. The stimulatory effect of LH could be observed under serum-free conditions and was maximal in the presence of 4% serum. Human granulosa-luteal cells also exhibited significant stimulatory responses to hCG, prostaglandin E2, or the cAMP effectors 8-bromo cAMP, choleratoxin, or forskolin in serum-free incubations. Concentrations of 17 beta-estradiol that are attained physiologically in ovarian follicles in vivo markedly suppressed basal and LH (or cAMP)-stimulated progesterone production in vitro (maximal suppression, greater than 90%). The nonaromatizable androgen 5 alpha-dihydrotestosterone also inhibited progesterone production, but by no more than 45-50% even at supraphysiological concentrations. Estradiol's blockade of progesterone synthesis was associated with a corresponding increase in pregnenolone accumulation. The present studies indicate that human granulosa-luteal cells isolated from preovulatory follicles induced with exogenous gonadotropins and hCG secrete large quantities of progesterone in vitro. Such cells retain stimulatory responses to human LH, hCG, prostaglandin E2, and classical cAMP effectors in serum-free incubations. Moreover, physiological concentrations of 17 beta-estradiol suppress progesterone production, probably by inhibiting cellular conversion of pregnenolone to progesterone. Thus, the present in vitro system permits an investigation of hormone action in well differentiated, human granulosa-luteal cells isolated from preovulatory Graafian follicles that have a defined endocrine history of prior gonadotropin exposure in vivo.