The aim of this investigation was to isolate, characterize, and culture the small and large luteal cell subpopulations forming the corpus luteum of the pregnant rat. Since the large luteal cells are extremely fragile and do not survive standard cell dispersion, a method which allows the survival and the long-term culture in serum-free media of small and large cells was developed. The two luteal cell populations differed not only by their size but also by their morphology in culture. The small luteal cells (12-20 mu in diameter) are characterized by a large oval nucleus, contain few lipid droplets and have a stellate shape. In contrast, the large luteal cells have a smaller spherical nucleus, high lipid content, and do not flatten out completely in culture, most probably due to the abundance of lipid droplets. Both luteal cell types express 3 beta HSD and the cytochrome P450 enzymes involved in steroidogenesis. However, it is the lipid filled large luteal cells that secrete the most progesterone, androgen, and estradiol; express greater amounts of P450scc and P450AROM; and possess more PRL and LH receptors. Despite the greater expression of LH receptor in the large luteal cells, small and large luteal cells responded to LH with equal increase in steroidogenic output. In serum free culture, luteal cells produced progesterone for up to 20 days; however, an exogenous source of cholesterol was a prerequisite for maximal progesterone secretion. The pattern of progesterone secretion by cultures of small and large luteal cells differed remarkably from that of mixed cell population. When nonsteroidogenic corpus luteum cells were cocultured with the large luteal cells, a severalfold increase in progesterone secretion was observed. This stimulation occurred even when cells were cocultured in the absence of exogenous source of cholesterol. In summary, a successful method was developed to disperse, isolate, and independently culture the two luteal cell populations forming the rat corpus lutem. The results indicate that the marked difference in the steroidogenic capacity of these two cell populations is due, in large part, to the difference in their size rather than to their origin in the follicle. In addition, the results have revealed an important effect of the nonsteroidogenic cells forming the corpus luteum on luteal cell steroidogenesis.