Primary cultures of gonadal cells from chicken embryos were used to explore the paracrine role of inhibin and activin during gonadal development. Fetal testicular and ovarian cells secreted high amounts of immunoactive inhibin. FSH caused a dose-related increase of cAMP and immunoactive inhibin concentrations in testicular cell cultures. Postreceptor signalling through the protein kinase A (PKA) pathway was confirmed by additional experiments with 8-bromo-cAMP, 3-isobutyl-1-methyl-xanthine (MIX), prostaglandins, forskolin, and choleratoxin. The relative ability of these agonists to stimulate cAMP production did not always correlate with their ability to stimulate inhibin secretion. Experiments with phorbol 12-myristate 13-acetate suggested that the regulation of immunoactive inhibin secretion also involves the protein kinase C (PKC) pathway. In addition, it was shown that recombinant human (rh)-inhibin increases the conversion of pregnenolone to androgens whereas rh-activin has the opposite effect. Recombinant human follistatin, an activin-binding protein, antagonized the actions of rh-activin and to a lesser extent those of rh-inhibin. In conclusion, these results show that during the development of the chicken embryo, gonadal inhibin secretion may be regulated by hormones and by local factors such as prostaglandins. Cross talk between the PKA and PKC pathways may be involved in this regulation. Recombinant human inhibin and rh-activin may have antagonistic roles in the paracrine control of gonadal steroidogenesis.