Given the paucity of information on the potential roles of bone morphogenetic proteins (BMPs) in the ruminant ovary we conducted immunolocalization and functional studies on cells isolated from bovine antral follicles. Immunocytochemistry revealed expression of BMP-4 and -7 in isolated theca cells whereas granulosa cells and oocytes selectively expressed BMP-6. All three cell types expressed a range of BMP-responsive type-I (BMPRIB, ActRI) and type-II (BMPRII, ActRII, ActRIIB) receptors supporting autocrine/paracrine roles within the follicle. This was reinforced by functional experiments on granulosa cells which showed that BMP-4, -6 and -7 promoted cellular accumulation of phosphorylated Smad-1 but not Smad-2 and enhanced 'basal' and IGF-stimulated secretion of oestradiol (E2), inhibin-A, activin-A and follistatin (FS). Concomitantly, each BMP suppressed 'basal' and IGF-stimulated progesterone secretion, consistent with an action to prevent or delay atresia and/or luteinization. BMPs also increased viable cell number under 'basal' (BMP-4 and -7) and IGF-stimulated (BMP-4, -6 and -7) conditions. Since FS, a product of bovine granulosa cells, has been shown to bind several BMPs, we used the Biacore technique to compare its binding affinities for activin-A (prototype FS ligand) and BMP-4, -6 and -7. Compared with activin-A (K d 0.28 6 0.02 nM; 100%), the relative affinities of FS for BMP-4, -6 and -7 were 10, 5 and 1% respectively. Moreover, studies on granulosa cells showed that preincubation of ligand with excess FS abolished activin-A-induced phosphorylation of Smad-2 and BMP-4-induced phosphorylation of Smad-1. However, FS only partially reversed BMP-6-induced Smad-1 phosphorylation and had no inhibitory effect on BMP-7-induced Smad-1 phosphorylation. These findings support functional roles for BMP-4, -6 and -7 as paracrine/autocrine modulators of granulosa cell steroidogenesis, peptide secretion and proliferation in bovine antral follicles. The finding that FS can differentially modulate BMP-induced receptor activation and that this correlates with the relative binding affinity of FS for each BMP type implicates FS as a potential modulator of BMP action in the ovary.