Wilms' tumor protein (WT1) is a transcriptional repressor essential for the development of mammalian kidneys and gonads. To gain insight into possible roles of WT1 in ovarian formation and follicular function, we studied patterns of mRNA and protein localization throughout fetal gonadal development and in ovaries of 4-wk-old and adult sheep. At Day 24 after conception, strong expression of WT1 mRNA and protein was observed in the coelomic epithelial region of the mesonephros where the gonad was forming. By Day 30, expression was observed in the surface epithelium and in many mesenchymal and endothelial cells of the gonad. Epithelial cells continued to express WT1 throughout gonadal development, as did pregranulosa cells during the process of follicular formation. However, WT1 expression was not observed in germ cells. During follicular growth, granulosa cells expressed WT1 from the type 1 (primordial) to the type 4 stages, but thereafter expression was reduced in type 5 (antral) follicles, consistent with the differentiation of granulosa cells into steroid-producing cells. The possible progenitor cells for the theca interna (i.e., the cell streams in the ovarian interstitium) expressed WT1 heterogeneously. However, differentiated theca cells in antral follicles did not express WT1. Strong expression of WT1 was observed during gonadal development, which is consistent with a role for WT1 in ovarian and follicular formation in the ewe. WT1 was identified in many cells of the neonatal and adult ovaries, including granulosa cells, suggesting that this factor is important for preantral follicular growth. However, the decline in WT1 expression in antral follicles suggests that WT1 may prevent premature differentiation of somatic cells of the follicle during early follicular growth.