The rapid proliferation of a tissue often requires the local production of a specific growth factor. The ovarian follicle is a rapidly growing tissue which contains two primary somatic cell types, granulosa cells and theca cells. Theca cells and granulosa cells were isolated from bovine ovaries and cultured to assess the possible local production of a growth factor within the ovarian follicle. Serum-free conditioned medium from theca cells, but not from granulosa cells, was found to contain a component that specifically bound to the epidermal growth factor (EGF) receptor. Therefore, theca cells appear to produce an EGF-like substance as a potential regulator of follicle cell growth. This result provides physiological significance to the previous observation that granulosa cells contain EGF receptors and respond to EGF to increase cell proliferation. Transforming growth factor-alpha (TGF alpha) is a protein that is structurally and functionally related to EGF and binds to the EGF receptor. Using a molecular probe to TGF alpha, theca cells were found to express the TGF alpha gene, which is consistent with the presence of an EGF-like substance in conditioned medium, but granulosa cells had no detectable TGF alpha gene expression. Similar analysis with a molecular probe to EGF demonstrated the apparent lack of EGF gene expression in theca cells or granulosa cells. As previously demonstrated with granulosa cells, the data presented indicate that theca cells also contain high affinity EGF receptors. TGF alpha was found to stimulate the growth of both granulosa and theca cells. These observations imply that within the ovarian follicle TGF alpha is produced by theca cells, which can subsequently have both a paracrine and an autocrine role in regulating follicle cell proliferation. Results presented demonstrate production of TGF alpha by a normal adult mesenchymal tissue and provide an example of a growth factor-mediated mesenchymal-epithelial cell interaction between theca cells and granulosa cells.