The ovarian follicular reserve has been linked to fertility in cattle. Young adult cattle with low vs. high numbers of antral follicles ≥ 3 mm in diameter in follicular waves also have fewer preantral follicles and decreased fertility. This underscores the importance of understanding the factors that regulate early follicular development and establish the ovarian follicular reserve, but little is known about how the follicular reserve is first established. In ruminants and humans, follicles form during fetal life, but there is a gap (about 50 d in cattle) between the appearance of the first primordial follicles and the first growing, primary follicles. In this review we present evidence that in cattle, fetal ovarian steroids (i.e., estradiol and progesterone) are negative regulators of both follicle formation and of the acquisition by newly formed follicles of the capacity to activate (i.e., initiate growth). The results indicate that capacity to activate is linked to the completion of meiotic prophase I by the oocyte. The inhibitory effects of estradiol on follicle activation were found to be reversible and correlated with inhibition of the progression of meiotic prophase I. Fetal bovine ovaries produce steroid hormones and production varies considerably during gestation and in a pattern consistent with the hypothesis that they inhibit follicle formation and capacity of newly formed follicles to activate in vivo. However, little was known about how steroid production is regulated. In our studies, both LH and FSH stimulated progesterone and estradiol production by ovarian pieces in vitro. The addition of testosterone to the culture medium enhanced estradiol production, especially when FSH was also present, but inhibited progesterone production, even in the presence of gonadotropins. Evidence is also presented for effects of maternal nutrition and health and for potential effects of estrogenic endocrine-disrupting chemicals on the size of the ovarian follicular reserve established during fetal life. In summary, fetal ovarian steroids may be important regulators of the early stages of follicular development in cattle. Therefore, external factors that alter steroid production or action may affect the size of the ovarian follicular reserve.