In short term, serum-free cultures of granulosa cells, estradiol inhibited basal progesterone production by more than 84% in a time- and dose-dependent fashion. Half-maximal inhibition (ID50) was observed at a mean estradiol concentration of 70 ng/ml. The acute inhibitory effects of estradiol were independent of cell density or maturational status of the parent follicle (small, medium, or large follicles). Estrogen decreased total progesterone biosynthesis, rather than merely progesterone secretion by granulosa cells. In addition, the production of progesterone and its 20 alpha-reduced metabolite were suppressed in parallel over a 30-fold range of inhibitory effects. Moreover, estradiol inhibited progesterone production from both endogenous and exogenous (25-hydroxycholesterol) substrate. In contrast to its inhibition of progesterone production, estradiol acutely enhanced pregnenolone accumulation and led to a 14- to 20-fold increase in the ratio of pregnenolone to progesterone. Inhibition of 3 beta-hydroxysteroid dehydrogenase activity was confirmed by demonstrating estrogen's ability to antagonize the conversion of exogenously supplied pregnenolone to progesterone in intact granulosa cells (ID50, 74 ng/ml) and to directly inhibit enzymic activity in ovarian homogenates (ID50, 79 ng/ml). On the other hand, estradiol did not alter the incorporation of [14C]acetate into cholesterol and specific progestins or influence the time-dependent hydrolysis of prelabeled cholesteryl ester stores in granulosa cells. In summary, in short term cultures of swine granulosa cells, estradiol significantly inhibits basal progesterone biosynthesis in a time- and dose-dependent fashion, encompassing estradiol concentrations attainable in vivo. Estrogen's inhibition is accomplished by mechanisms that are independent of cytotoxicity, cell density, and maturational stage of the parent follicle. The predominant locus of estrogen action is blockade of pregnenolone's conversion to progesterone, rather than accelerated metabolism of progesterone to its 20 alpha-reduced metabolite. Moreover, estradiol simultaneously enhances functional cholesterol side-chain cleavage activity without suppressing de novo cholesterol biosynthesis or impairing the mobilization of cellular cholesteryl ester stores. Thus, we infer that increasing concentrations of estradiol attained in antral follicular fluid during the later stages of follicle maturation could effectively limit the premature secretion of large quantities of progesterone before ovulation without impairing the cell's capacity for de novo cholesterol biosynthesis or cholesteryl ester hydrolysis.