The follicle plays a major role in the dual function of the ovary--oocyte maturation and release and steroidogenesis required for regulating its own growth and providing the proper environment in reproductive organs for the transport of gametes and nidation. Some aspects of how follicles attain their functional competence following a series of developmental changes are discussed. The presentation is based on data obtained mainly in rodents in which follicular development occurs postnatally. The peak activity of follicular growth occurs during the 1st week of life, but not until the 5th day is follicular development clearly dependent upon gonadotrophin stimulation. The formation of the theca layer and zona pellucida, differentiation of the vascular system and competence to respond to gonadotrophins are acquired during the 2nd week. FSH alone is primarily responsible for granulosa cell proliferation and the integrity of the granulosa cell membrane, but has little differential effect on steroidogenic enzymes. Synergism of FSH and LH promotes an enrichment of the theca layer, enhancement of vascular development and antrum formation, and induces a marked differential stimulation of 20alpha-hydroxysteroid dehydrogenase, aromatizing and cholesterol side-chain cleavage systems. The number of gonadotrophin receptors on granulosa and theca cells increases with follicular development. Steroids secreted by the ovary seem to modulate follicular growth, not only by effects upon FSH and LH release but also by a local influence within the ovary. A number of physiological events related to follicular function are explained according to these observations.