Output of progesterone, the end product of the steroidogenic pathway, was studied in isolated chicken granulosa cells in relation to follicular maturation and during the ovulation cycle with particular reference to the period between the LH peak and ovulation. The evidence gathered from a series of experiments conducted during the past 2-3 years in the authors' laboratory indicate that the steroidogenic capacity of granulosa cells during follicular maturation is regulated not so much by receptor-coupled adenylate cyclase activity as has been proposed by other investigators, but by the activity of key steroidogenic enzymes, particularly the cholesterol 20,22 desmolase. Furthermore, granulosa cells undergo cyclic sensitization following the endogenous LH surge reaching maximal responsiveness about 1 hr before oviposition. This is followed by a rapid desensitization shortly before ovulation. This desensitization extends to the second and subsequent developing follicles probably in proportion to the evolving LH receptors. It is suggested that granulosa cells remain in such a desensitized state for several hours postovulation, during which time progesterone responses to LH are attenuated and consequently ovulation does not occur prematurely. It is proposed that this intraovarian mechanism is an important component of the physiological events that regulate the ovulation cycle in the domestic fowl.