The objective was to determine the effects of ovariectomy and epithelial-stromal interactions on mammary development and local expression of IGF-I and IGF-binding protein (IGFBP) mRNA in prepubertal heifers. An epithelium-free ('cleared') fat pad (CFP) was prepared in two glands in each of 14 Holstein heifers, aged 1-3 months. Eight of the calves were also ovariectomized. Serum concentrations of GH, IGF-I and prolactin were not affected by ovariectomy. At 6 months of age, calves were killed to provide mammary samples of parenchyma, CFP and intact fat pad (MFP). Total mammary mass was reduced in ovariectomized calves (130 21 g vs 304 25 g; P<0·001), and in several cases parenchymal tissue was essentially absent. Uterus weight was also reduced by ovariectomy (14·5 3·8 g vs 30·4 4·5 g; P<0·05). In support of our hypothesis that local IGF-I mediates prepubertal mammary development, mRNA expression of IGF-I was lower in ovariectomized than in control calves (62·1 7·8 vs 91·6 7·8 arbitrary units; P<0·05). Specific binding of IGF-I to mammary parenchymal microsomes was also reduced by ovariectomy (377 142 vs 868 82 c.p.m.; P<0·01), suggesting decreased sensitivity to IGF-I. Expression of IGFBP-3 and IGFBP-5 mRNA were not influenced by ovariectomy. Expression of IGF-I, IGFBP-3 and IGFBP-5 mRNA did not differ between CFP and MFP, suggesting that expression of these factors was not influenced by interactions between stroma and developing epithelium. Overall, the data suggested that interactions between the ovary and the local IGF-I axis act to optimize the availability and effectiveness of IGF-I within the gland to stimulate mammary growth.