In the gonads, there are two recognized signal transduction mechanisms which operate in the processing of hormonal stimuli. The gonadotropins, follicle stimulating hormone and luteinizing hormone, act primarily through the generation of cyclic AMP. Several other hormonal regulators in the ovary and the testis, such as gonadotropin releasing hormone and prostaglandin F2 alpha stimulate inositol lipid metabolism following receptor binding. This triggers a cascading mechanism which ultimately results in the generation of increased cytosolic free calcium levels, enhanced protein kinase C activity, and liberation of arachidonic acid. There is also evidence that luteinizing hormone shares in the activation of this pathway. In this review, the significance of these signal transduction pathways is discussed in relation to the effects of various hormones on steroid biosynthesis in the gonads.