The follicular components responsible for the synthesis of progesterone (P), testosterone (T) and estrogen (E) have been identified by studying in vitro the steroidogenic pattern of theca or granulosa cells incubated alone with or without ovine FSH, ovine LH, P or T or incubated together with or without ovine LH. Granulosa cells, but not theca cells, isolated from 3 largest preovulatory and postovulatory follicles produced more P in response to the addition of exogenous gonadotropins. Among the 4 different types of follicles, this response of granulosa cells isolated from the largest follicle (F1), the one destined to ovulate next, was the greatest. Both theca and granulosa cells isolated from preovulatory follicles produced 2-3 times more T when incubated in the presence of gonadotropins. Only theca cells from the second (F2) and third (F3) largest follicles synthesize more E when incubated with gonadotropins. The response of F3 was greater than that of F2. Addition of T to the incubation system elicited E synthesis by theca cells of F2 or F3, but not by granulosa cells of any size follicles. Again, the response of theca cells from F3 was greater than that of F2. Furthermore, the ability of theca cells of F3, isolated at or shortly after the preovulatory in vivo LH surge, to aromatize T to E was significantly lower than that isolated several hours before the LH surge. Combination of the 2 follicular cell types from F3 decreased P, but increased T (9- to 17-fold increase) and E synthesis. Theca cells incubated with exogenous P prolonged large amounts of T. The authors concluded that the cellular source for P is the granulosa cell and the source for T and E is the theca cell. Theca alone cannot synthesize T or E unless the precursor, P or T, respectively, is added. Both theca and granulosa cells are required for synthesis of T, followed by E. Thus, a 2 cell type model for synthesis of these 2 steroids is proposed. The present study also suggests that the steroidogenic potential of the follicular cells changes during the process of follicular maturation.