There is growing evidence that the function of ovarian theca-interstitial (T-I) cells may be modulated by paracrine actions of activin, inhibin, and follistatin. Furthermore, either dysregulation, dysfunction, or both, of these peptides may play a role in conditions associated with T-I hyperplasia, such as polycystic ovary syndrome (PCOS) and hyperthecosis. This study was designed to evaluate the role of activin, inhibin, and follistatin in the modulation of T-I cell proliferation. Interaction of these peptides with insulin-like growth factor-I (IGF-I), a known stimulator of T-I cell proliferation, was also assessed. Purified rat T-I cells were cultured for 48 h in chemically defined media and with or without activin (3–30 ng/ml), inhibin (3–30 ng/ml), follistatin (100 ng/ml), and/or IGF-I (10 nM). T-I cell proliferation was assessed using radiolabeled thymidine incorporation assay. Activin alone stimulated proliferation of T-I cells in a dose-dependent fashion (by up to 320% above control; P < 0.001), whereas inhibin alone or follistatin alone had no significant effect. Inhibin had also no effect on activin-induced proliferation. Follistatin significantly reduced the stimulatory effects of activin and decreased proliferation by up to 46% (P < 0.01) below the level attained in the presence of activin alone. IGF-I (10 nM), at a dose producing a near-maximal effect, increased proliferation by 175% above control (P < 0.001); insulin (10 nM) increased proliferation by 52% above control (P < 0.03). A combination of IGF-I (10 nM) and activin (30 ng/ml) resulted in a 1090% increase of proliferation above control (P < 0.001); this stimulatory effect was significantly greater than that achieved in the presence of either activin alone or IGF-I alone (P < 0.001). Similarly, a combination of insulin (10 nM) and activin (30 ng/ml) increased proliferation by 506% above control levels. Flow cytometry evaluation revealed that activin increased the proportion of actively dividing cells (in S or G2/M phase of the cell cycle) by 42% (P < 0.02), whereas IGF-I had no effect on the proportion of actively dividing cells. The present findings indicate that an activin-follistatin system may be involved in the regulation of the size of ovarian thecal-stromal compartment. In view of the synergy between activin and IGF-I, and the difference in the effects on the cell cycle distribution, stimulation of T-I proliferation by these agents is likely to be mediated via separate transduction pathways. Excess activin or insufficient follistatin may contribute to T-I hyperplasia.