A growing body of evidence indicates that factors secreted by cells of the immune system can directly affect a variety of endocrine phenomena. In the present study we examined the direct effects of the cytokine, interferon (IFN), on FSH-stimulated steroidogenesis and LH/hCG receptor induction in rat granulosa cells. We show that gamma-IFN, but not alpha-IFN, inhibits FSH-stimulated progesterone, 20 alpha-hydroxypregn-4-en-3-one and estrogen production as well as gonadotropin-induced LH/hCG receptor formation in a dose-dependent manner. The results suggest that gamma-IFN may play a role in the maturation and differentiation of granulosa cells and thus may serve as a regulatory link between the immune and reproductive endocrine systems.