This study examined fetal chondrocyte proliferation and function following exposure to transforming growth factor-beta and insulin-like growth factor-I. Fetal equine articular chondrocytes of the early third-trimester were isolated and cultured in monolayer conditions, then exposed to 0, 1, 5, or 10 ng/ml transforming growth factor-beta or 0, 10, 50, or 100 ng/ml insulin-like growth factor-I for 48 hours. Proliferative responses were assessed by cell counts and [3H]thymidine uptake into precipitable DNA. Differentiated chondrocyte metabolic activity was determined by sulfated glycosaminoglycan quantitation, 35[SO4] incorporation into precipitable glycosaminoglycan, and proteoglycan molecular sizing by CL-2B column chromatography. Morphological changes seen on phase-contrast microscopy included a larger proportion of rounded cells in monolayer cultures supplemented with insulin-like growth factor-I and cytotoxic changes in cells treated with transforming growth factor-beta. Both insulin-like growth factor-I and transforming growth factor-beta resulted in significant elevations of [3H]thymidine uptake; however, cell numbers did not rise sufficiently over the 48-hour culture period to reach significant levels. Maximum mitogenic responses were evident at 50 and 100 ng/ml insulin-like growth factor-I and 5 ng/ml transforming growth factor-beta. The production of proteoglycan was also enhanced (435%) by exposure to 50 ng/ml insulin-like growth factor-I, and an increased proportion of larger proteoglycan monomer species was evident in cultures treated with 50 and 100 ng/ml insulin-like growth factor-I. A similar dose-response was also evident in cultures treated with transforming growth factor-beta (maximal 164% increase with 5 ng/ml), although the presence of serum in the culture medium altered the pattern of enhanced proteoglycan synthesis to favor the lower concentration of 1 ng/ml (191%). Additionally, larger proteoglycan molecules were synthesized in response to high concentrations of transforming growth factor-beta in serum-free cultures. Significant biochemical changes resulted from the addition of transforming growth factor-beta to fetal chondrocyte cultures; however, monolayer cultures that were treated with transforming growth factor-beta and supplemented with serum began to develop cellular toxicity, including nuclear pyknosis and cytoplasmic fragmentation. Degenerative cellular changes were not evident in cultures treated with insulin-like growth factor-I, and significant differentiated metabolic activity resulted from the presence of insulin-like growth factor-I in the culture medium. These data suggest that the responses of fetal chondrocytes to insulin-like growth factor-I and transforming growth factor-beta were enhanced compared with the responses of chondrocytes derived from postnatal animals and that these metabolically active cells can be primed by endogenous or exogenous growth factors to provide enhanced articular function and repair.