In addition to gonadotropins, steroidogenesis and proliferation of granulosa cells during follicular development are controlled by a number of intraovarian factors including growth differentiation factor-9 (GDF-9), bone morphogenetic protein-4 (BMP-4), and IGF-I. The objective of this study was to determine the effect of GDF-9 and BMP-4 and their interaction with IGF-I and FSH on ovarian granulosa cell function in cattle. Granulosa cells from small (1–5 mm) and large (8–22 mm) follicles were collected from bovine ovaries and cultured for 48 h in medium containing 10% fetal calf serum and then treated with various hormones in serum-free medium for an additional 48 h. We evaluated the effects of GDF-9 (150–600 ng/ml) and BMP-4 (30 ng/ml) during a 2-day exposure on hormone-induced steroidogenesis and cell proliferation. In FSH plus IGF-I-treated granulosa cells obtained from small follicles, 300 ng/ml GDF-9 reduced (P<0.05) progesterone production by 15% and 600 ng/ml GDF-9 completely blocked (P<0.01) the IGF-I-induced increase in progesterone production. In comparison, 300 and 600 ng/ml GDF-9 decreased (P<0.05) estradiol production by 27% and 71% respectively, whereas 150 ng/ml GDF-9 was without effect (P>0.10). Treatment with 600 ng/ml GDF-9 increased (P<0.05) numbers (by 28%) of granulosa cells from small follicles. In the same cells treated with FSH but not IGF-I, co-treatment with 600 ng/ml GDF-9 decreased (P<0.05) progesterone production (by 28%), increased (P<0.05) cell numbers (by 60%), and had no effect (P>0.10) on estradiol production. In FSH plus IGF-I-treated granulosa cells obtained from large follicles, GDF-9 caused a dose-dependent decrease (P<0.05) in IGF-I-induced progesterone (by 13–48%) and estradiol (by 20–51%) production. In contrast, GDF-9 increased basal and IGF-I-induced granulosa cell numbers by over 2-fold. Furthermore, treatment with BMP-4 also inhibited (P<0.05) steroidogenesis by 27–42% but had no effect on cell numbers. To elucidate downstream signaling pathways, granulosa cells from small follicles were transfected with similar to mothers against decapentaplegics (Smad) binding element (CAGA)- or BMP response element (BRE)-promoter reporter constructs. Treatment with GDF-9 (but not BMP-4) activated the Smad3-induced CAGA promoter activity, whereas BMP-4 (but not GDF-9) activated the Smad1/5/8-induced BRE promoter activity. We have concluded that bovine granulosa cells are targets of both GDF-9 and BMP-4, and that oocyte-derived GDF-9 may simultaneously promote granulosa cell proliferation and prevent premature differentiation of the granulosa cells during growth of follicles, whereas theca-derived BMP-4 may also prevent premature follicular differentiation.