Corticosteroids inhibit the differentiation of adipocyte precursor cells in the presence of fetal calf serum. This inhibition is more pronounced in serum-free media or in the presence of serum, extracted free from steroid hormones. Progesterone antagonized this inhibition in serum-free media and in media with extracted serum, and caused an increased differentiation in media with sera where corticosteroids had not been removed. Corticosteroid hormones bind specifically to these cells. The binding is saturable and has a Kd in the order of circulating hormonal concentrations. Progesterone competes effectively with this binding at physiological concentrations. Progesterone is also bound to these cells but 17-beta-estradiol, is not. Neither of these hormones shows effects alone or in combination with each other on the development of new adipocytes in the system in question. It was speculated that the effect of progesterone to release corticosteroid inhibition of adipose precursor cell differentiation might be of importance during pregnancy, and contribute to the risk of development of hyperplastic obesity.