The changing pattern of granulosa cell expression of inhibin/activin subunits and follistatin during follicle development and their differential regulation by extrinsic and intraovarian factors supports evidence from functional studies, mostly in vitro, that these proteins have important roles in folliculogenesis, oocyte maturation and corpus luteum function. Gonadal inhibins function as negative feedback hormones to regulate the synthesis and secretion of pituitary FSH, a key determinant of follicle development, but there is little supportive evidence for a peripheral endocrine role for ovary-derived activins or follistatin in this regard. However, activins and follistatin are expressed in numerous other tissues, including anterior pituitary, and they are firmly implicated as local intrapituitary regulators of FSH secretion. Intraovarian actions of granulosa cell-derived activins include the promotion of granulosa cell proliferation and upregulation of FSH receptors, P450arom, oestrogen synthesis, granulosa cell LH receptors and enhancement of oocyte maturation. Through its activin-binding role, follistatin can reverse each of these activin-induced responses. In addition to their endocrine feedback role, granulosa-derived inhibins can sensitize theca cells to LH, thereby enhancing the production of androgens, an essential requirement for follicular oestrogen synthesis. Activins can oppose this effect and suppress thecal androgen production. Granulosa cells overproduce inhibin a subunit precursor relative to betaA/betaB subunit precursors and evidence indicates that different parts of the inhibin a subunit precursor have intrinsic biological activities distinct from inhibin alphabetaA/B dimer, and serve as additional local modulators of follicle and corpus luteum function.