Lithium chloride (LiCl) is a drug used to treat bipolar disorder, but has side effects in the female reproductive system. Although lithium is known to decrease folliculogenesis and induce follicular atresia in rodent ovaries, its cellular and molecular effects in the ovary have not yet been addressed. To investigate these effects, 23-day-old immature female rats were injected with 10 IU pregnant mare serum gonadotropin (PMSG), followed by injections of 250 mg/kg LiCl every 12 hr for four doses. Ovaries were removed 40 and 48 hr after PMSG administration and prepared for histology, immunohistochemistry, Western blotting, and DNA laddering analysis. Our results showed that in the ovaries of LiCl-treated rats, few antral but more atretic follicles were present compared to those of the control rats. The induction of atresia by LiCl was further confirmed by the presence of DNA fragmentation, accompanied by a reduced level of 17β-estradiol in the serum. At the cellular level, lithium significantly decreased the number of proliferating cell nuclear antigen (PCNA)-positive cells and conversely increased the number of TUNEL-positive cells in the granulosa layer of the antral follicles. At the molecular level, lithium increased the level of phosphorylated glycogen synthase kinase-3β, and unexpectedly decreased the expression of active (stabilized) β-catenin. Altogether, our results indicate that lithium disrupts the balance between proliferation and apoptosis in granulosa cells, leading to follicular atresia possibly through the reduction in both the stabilized β-catenin and 17β-estradiol synthesis.