Acetylcholine (ACh) may be involved in the regulation of ovarian functions. A previous systemic study in rats showed that a 4‐week, intrabursal local delivery of the ACh‐esterase blocker Huperzine‐A increased intraovarian ACh levels and changed ovarian follicular development, as evidenced by increased healthy antral follicle numbers and corpora lutea, as well as enhanced fertility. To further characterize the ovarian cholinergic system in the rat, we studied whether innervation may contribute to intraovarian ACh. We explored the cellular distribution of three muscarinic receptors (MRs; M1, M3, and M5), analyzed the involvement of MRs in ovarian steroidogenesis, and examined their roles in ovarian follicular development in normal conditions and in animals exposed to stressful conditions by employing the muscarinic antagonist, atropine. Denervation studies decreased ovarian norepinephrine, but ovarian ACh was not affected, evidencing a local, nonneuronal source of ACh. M1 was located on granulosa cells (GCs), especially in large antral follicles. M5 was associated with the ovarian vascular system and only traces of M3 were found. Ex vivo ovary organo‐typic incubations showed that the MR agonist Carbachol did not modify steroid production or expression of steroid biosynthetic enzymes. Intrabursal, in vivo application of atropine (an MR antagonist) for 4 weeks, however, increased atresia of the secondary follicles. The results support the existence of an intraovarian cholinergic system in the rat ovary, located mainly in follicular GCs, which is not involved in steroid production but rather via MRs exerts trophic functions and regulates follicular atresia.