The local actions of the inhibin-related peptides inhibin, activin, and follistatin in folliculogenesis, luteinization and atresia are reviewed. On the basis of in vitro data, it is concluded that (a) inhibin has a paracrine action positively regulating LH-induced androgen production by theca cells in addition to a peripheral role regulating FSH secretion; (b) activin has a negative paracrine action on LH-induced androgen production by theca cells; (c) activin, either alone or with FSH, has an autocrine action on granulosa cells, promoting differentiation during the preantral and early antral stages of folliculogenesis and preventing premature luteinization in the later stages of antral follicle development, leading overall to promotion and maintenance of the folliculogenic state of the follicle; and (d) follistatin modulates granulosa cell function in favor of luteinization or atresia, and its mechanism of action involves neutralizing the actions of activin by its binding properties and by a direct action of follistatin on progesterone metabolism by granulosa cells. A hypothesis for a role of activin in the acquisition of responsiveness of granulosa cells of preantral follicles to FSH is proposed.