This study was designed to explore the role of prolactin (PRL) in the modulation of follicular growth and steroidogenesis. An ovarian perifusion technique was used to determine the effect of PRL on steroid production by ovarian tissue. Immature female rats were injected with 5 IU pregnant mare’s serum gonadotropin to induce follicular maturation. After 40 h rats were killed, ovaries removed, and follicles dissected out. Follicles were divided into two groups (small, ≤ 4 mm; large, ≥ 5 mm in diameter), cut into fine fragments, and perifused for 6 h in the presence or absence of ovine PRL (100 or 1,000 ng/ml). In the group of small follicles, either of the PRL doses reduced the ability of follicular tissues to convert androgen to estrogen. HCG-induced production of progesterone by small follicles was also suppressed by higher doses of PRL. On the other hand, in the group of large follicles, PRL showed no effects on the aromatization and progesterone release by the follicular fragments. These results suggest that the small immature follicle is more sensitive to the inhibitory action of PRL on steroidogenesis and folliculogenesis. Thus it is possible that PRL may have a modulatory role in follicular growth and maturation and, consequently, in the selection of ovulatory follicle.