Differentiation of mammary epithelial cells prepared from pregnant mice was stimulated by culture on floating collagen gels in the presence of lactogenic hormones. Differentiation was measured by the induction of casein synthesis and fatty acid synthase activity, both of which increased by up to 15-fold during 12 days of culture. Addition of a 10-30 kDa fraction of goat whey proteins to culture medium from day 3 inhibited casein synthesis by greater than 20% compared with control cultures on days 4-12, and prevented further induction of fatty acid synthetase activity. Inhibition of secretory cell differentiation by this fraction, which is known to inhibit milk synthesis acutely in explant culture and lactating goats, suggests that similar autocrine mechanisms may mediate the sequential local effects on milk yield and cell differentiation elicited by manipulation of milking frequency or efficiency.