In addition to pituitary gonadotropins and paracrine factors, ovarian follicle development is also modulated by oocyte factors capable of stimulating granulosa cell proliferation but suppressing their differentiation. The nature of these oocyte factors is unclear. Because growth differentiation factor-9 (GDF-9) enhanced preantral follicle growth and was detected in the oocytes of early antral and preovulatory follicles, we hypothesized that this oocyte hormone could regulate the proliferation and differentiation of granulosa cells from these advanced follicles. Treatment with recombinant GDF-9, but not FSH, stimulated thymidine incorporation into cultured granulosa cells from both early antral and preovulatory follicles, accompanied by increases in granulosa cell number. Although GDF-9 treatment alone stimulated basal steroidogenesis in granulosa cells, cotreatment with GDF-9 suppressed FSH-stimulated progesterone and estradiol production. In addition, GDF-9 cotreatment attentuated FSH-induced LH receptor formation. The inhibitory effects of GDF-9 on FSH-induced granulosa cell differentiation were accompanied by decreases in the FSH-induced cAMP production. These data suggested that GDF-9 is a proliferation factor for granulosa cells from early antral and preovulatory follicles but suppresses FSH-induced differentiation of the same cells. Thus, oocyte-derived GDF-9 could account, at least partially, for the oocyte factor(s) previously reported to control cumulus and granulosa cell differentiation.