Undifferentiated granulosa cells from prehierarchal (6- to 8-mm-diameter) hen follicles express very low to undetectable levels of LH receptor (LH-R) mRNA, P450 cholesterol side chain cleavage (P450scc) enzyme activity, and steroidogenic acute regulatory (StAR) protein, and produce negligible progesterone, in vitro, following an acute (3-h) challenge with either FSH or LH. It has previously been established that culturing such cells with FSH for 18–20 h induces LH-R, P450scc, and StAR expression, which enables the initiation of progesterone production. The present studies were conducted to characterize the ability of activin and transforming growth factor (TGF) β, both alone and in combination with FSH, to promote hen granulosa cell differentiation, in vitro. A 20-h culture of prehierarchal follicle granulosa cells with activin A or transforming growth factor β (TGFβ)1 increased LH-R mRNA levels compared with control cultured cells. Activin A and TGFβ1 also promoted FSH-receptor (FSH-R) mRNA expression when combined with FSH treatment. Neither activin A nor TGFβ1 alone stimulated progesterone production after 20 h culture. However, preculture with either factor for 20 h (to induce gonadotropin receptor mRNA expression) followed by a 3-h challenge with FSH or LH potentiated StAR expression and progesterone production compared with cells challenged with gonadotropin in the absence of activin A or TGFβ1 preculture. Significantly, activation of the mitogen-activated protein (MAP) kinase pathway with transforming growth factor α (TGFα) (monitored by Erk phosphorylation) blocked TGFβ1-induced LH-R expression, and this effect was associated with the inhibition of Smad2 phosphorylation. We conclude that a primary differentiation-inducing action of activin A and TGFβ1 on hen granulosa cells from prehierarchal follicles is directed toward LH-R expression. Enhanced LH-R levels subsequently sensitize granulosa cells to LH, which in turn promotes StAR plus P450scc expression and subsequently an increase in P4 production. Significantly, the finding that TGFβ signaling is negatively regulated by MAP kinase signaling is proposed to represent a mechanism that prevents premature differentiation of granulosa cells.