Activin is a protein originally isolated from follicular fluid as a factor stimulating FSH release from the pituitary. The present experiments support the hypothesis that activins may also regulate follicle development by autocrine/paracrine mechanisms. Granulosa-oocyte complexes were isolated by collagenase/dispase dispersion of ovaries from 14- or 21-day-old rats and cultured in serum-free medium. Within 24 h, the cells had spread to form a monolayer. Hormones and growth factors were added at this time. Cell number and thymidine incorporation were measured after an additional 72 h. In the presence of insulin and transferrin, activin-A increased both granulosa cell number and thymidine incorporation more than 2-fold. This effect could be inhibited by follistatin, an activin-binding protein. In addition, activin-A, in the presence of FSH, induced reorganization of follicular structures from monolayer culture of cells from 14-day-old rats and caused cells from primary follicles to develop into large follicle-like structures. These structures contained oocytes, a cumulus layer, an antrum, and a multilayered follicular wall with a diameter of more than 1 mm. Electron microscopy revealed that the cells in the follicle-like structure were connected by gap junctions. Oocytes showed a mature morphology and had closely associated cumulus layers. Dissociation of the follicular wall in these follicle-like structures was induced by the addition of LH, resembling the induction of ovulation in vivo. The findings are important for understanding follicular development and atresia.