A procedure for the culture of isolated wool follicles from Merino sheep is described. Follicles were microdissected from midside skin samples of 2-yr-old wethers and transferred, individually, to 24-well tissue culture plates. When maintained in supplemented Williams' E medium containing 5 to 10% fetal bovine serum (FBS), insulin, hydrocortisone, and a trace element mixture, fibre growth rates of 40 to 80 microns/day were observed. Follicles maintained their morphologic integrity for up to 7 days, incorporated [methyl-3H]thymidine into DNA and [35S]methionine into intermediate-filament keratins of the growing fiber. Insulin and hydrocortisone stimulated fiber growth at concentrations of 10 micrograms/ml and 50 ng/ml, respectively, but higher doses were inhibitory. The growth of fibers in response to hydrocortisone and the changes in follicle morphology was similar to those induced in skin after systemic administration of cortisol in vivo. A positive interaction between hydrocortisone and trace elements for follicle survival and hydrocortisone, insulin, and FBS for fiber growth was also found. The successful culture of Merino sheep follicles provides a model with which to study the direct influence of endocrine, nutritional and local factors on wool keratin synthesis independently of systemic shifts in the animals' metabolism.