Little is known about the role of activin B during folliculogenesis. This study investigated the expression levels of activin/inhibin subunits (βA, βB, and α), steroid enzyme, and gonadotrophin receptors in theca (TC) and granulosa cells (GC) by QPCR and activin A and B and inhibin A protein levels in follicular fluid (FF) of developing sheep follicles during estrus and anestrus. The effect of activin B on androgen production from primary TC cultures in vitro was also assessed. During folliculogenesis, in anestrus and estrus, FF activin B concentrations and thecal and GC activin βB mRNA levels decreased as follicle diameter increased from 1–3 to >6 mm regardless of estrogenic status. Estrogenic preovulatory follicles had reduced concentrations of FF activins B and A, and TC and GCs expressed higher levels of activin βA mRNA at 3–4 mm, and TCs more inhibin α mRNA at >4 mm stages of development compared with nonestrogenic follicles. Activin B decreased androstenedione production from primary TCs in vitro, an effect blocked by inhibin A. Thus, sheep follicles 1–3 mm in diameter contained high FF levels of activin B, which decreased as the follicle size increased, and, like activin A, suppressed thecal androgen production in vitro, an effect blocked by inhibin. Furthermore, the theca of large estrogenic follicles expressed high levels of inhibin α and activin βA mRNA suggesting local thecal derived inhibin A production. This would inhibit the negative effects of thecal activins B and A ensuring maximum androgen production for enhanced estradiol production by the preovulatory follicle(s).