We have studied the role of hormones in the growth and differentiation of fetal rat intestine. Pieces of small intestine from 15-day fetal rats were transplanted under the renal capsule of either normal, hypophysectomized (HX), or diabetic adult rats and grown for 11 days. Intestine transplants in control hosts showed normal differentiation and they increased 60-fold in protein content and wet weight. Growth of transplants in HX and diabetic hosts was reduced by 50 and 25%, respectively. Transplants in diabetic hosts were histologically normal, while those in HX hosts failed to develop villi and discrete smooth muscle layers. Normal growth and differentiation in HX and diabetic hosts were completely restored by administration of growth hormone (GH) or insulin, respectively. Our data indicate that both GH and insulin are necessary for normal growth of the transplanted intestine during a period corresponding to late fetal and early neonatal life, but only the former is required for normal differentiation.