Abstract. Growth hormone increases tissue formation by acting both directly and indirectly on target cells. The direct action promotes the differentiation of precursor cells; this has been demonstrated for two mesenchymal cell types. Insulin-like growth factor I (IGF-I) is not able to substitute for growth hormone in promoting this differentiation, but it is proposed that its mitogenic action selectively promotes cell multiplication in young differentiated clones. As tissue growth results from both the creation of new differentiated cells and their subsequent clonal expansion, both effectors increase tissue growth, but by different means.