A simple dissociation procedure and the collagen gel culture system have been utilized to determine the effects of mammogenic hormones and epidermal growth factor (EGF) on the proliferation of normal rat mammary epithelial (RME) cells in serum-free culture. Epithelial fragments, isolated from normal virgin F344 rat mammary glands by enzyme digestion followed by Percoll density gradient centrifugation, were embedded within a rat tail collagen matrix. A three- to four-fold increase in cell number was observed when ovine prolactin (PRL) and progesterone (P) were present in the basal medium during 7 days of culture. Mouse EGF stimulated one cell doubling during the same culture period. Isolated mammary organoids produced a 'stellate' type colony when PRL + P were present in the culture medium. These colonies were composed of small, tightly packed cuboidal cells. The addition of EGF to the basal medium produced a diffuse 'basket' type colony which was composed of large, elongate cells. When the complete hormonal and growth factor combination (PRL + P + EGF) was present, a 'mixed' type colony was observed which contained both the large and small epithelial cell types. Immunocytochemical analysis revealed that both the cuboidal and elongate cells present in the two colony types stained with antibodies to keratin indicating that these cells were epithelial in nature. The small cuboidal cells also expressed thioesterase II and alpha-lactalbumin, both specific for secretory mammary epithelial cells. The large, elongate cell type, however, was positive for actin but did not stain for either secretory epithelial specific marker. The results reported here suggest that normal rat mammary tissue may contain two epithelial populations, one which responds to PRL + P and the other which responds to EGF.