CircRNAs are essential in regulating follicle growth and development and the female reproductive system at multiple levels. However, the molecular mechanism by which circRNAs regulate reproduction in sheep is unclear and requires further exploration. In this study, RNA sequencing was performed to reveal the circRNA expression profiles in the ovaries of Cele black sheep and Hetian sheep during estrus. Analysis of the number of circRNAs in their host genes revealed that 5031 genes could produce 20,835 circRNAs. Among the differentially expressed circRNAs (DEcircRNA), 75 were upregulated, and 105 were downregulated. Functional enrichment analysis showed that the host genes of DEcircRNA were involved in several pathways, including the MAPK and Hippo signaling pathway. In addition, we constructed a subnetwork of competitive endogenous RNA (ceRNA) containing 4 mRNAs, 4 microRNAs (miRNAs), and 10 circRNAs, potentially related to follicle development. Functional circRNAs (e.g., novel_circ_0003851, novel_circ_0015526, novel_circ_0008117) were found to act as ceRNAs for follicle growth and development-related mRNAs (CUEDC1, KPNB1, ZFPM2) by sponging functional miRNAs (miR-29a, miR-29b, miR-17-5p). Finally, through an RNA pull-down assay, oar-miR-125b was selected and confirmed as the target miRNA of novel-circ-0041512. We analyzed the overall expression of circRNAs in sheep ovaries. Further, we explored the potential mechanisms underlying the circRNA functions, providing a theoretical basis for the genetic progress of reproductive traits in sheep.