Development of follicular cysts is a frequent ovarian dysfunction in cattle. Functional changes that precede cyst formation are unknown, but a role for anti-Müllerian hormone (AMH) in the development of follicular cysts has been suggested in humans. This study aimed to characterize intrafollicular steroids and AMH during follicular growth in a strain of beef cows exhibiting a high incidence of occurrence of follicular cysts. Normal follicular growth and cyst development were assessed by ovarian ultrasonography scanning during the 8 days before slaughtering. Experimental regression of cysts was followed by rapid growth of follicles that reached the size of cysts within 3–5 days. These young cysts exhibited higher intrafollicular concentrations of testosterone, estradiol-17beta, and progesterone than large early dominant follicles did in normal ovaries, but they exhibited similar concentrations of AMH. Later-stage cysts were characterized by hypertrophy of theca interna cells, high intrafollicular progesterone concentration, and high steroidogenic acute regulatory protein mRNA expression in granulosa cells. Progesterone and AMH concentrations in the largest follicles (≥10 mm) and cysts were negatively correlated (r == −0.45, P << 0.01). Smaller follicles (<<10 mm) exhibited higher intrafollicular testosterone and estradiol-17beta concentrations in ovaries with cysts compared to normal ovaries. During follicular growth, AMH concentration dropped in follicles larger than 5 mm in diameter and in a similar way in ovaries with and without cysts. In conclusion, enhanced growth and steroidogenesis in antral follicles <<10 mm preceded cyst formation in cow ovaries. Intrafollicular AMH was not a marker of cystic development in the cow, but low AMH concentrations in cysts were associated with luteinization.