During folliculogenesis, follicular cells are crucial in initiating oocyte development and providing with nutrients and growth regulators for the oocytes. Somatic follicular cell differentiation is well coordinated with oocyte maturation. The objective of this project is to test if follicular cell steroidogenesis can be used as a marker for the quality of the embrace oocytes. We have developed an in-vitro culture system that supports the growth of preantral follicles and retains their competency for fertilization and subsequent embryo development in mouse models. Mechanically isolated mouse preantral follicles were cultivated singly in micro<font>drop</font>lets under oil in medium supplemented with recombinant FSH and LH at 37°C and 5% CO2.Under an optimal concentration of FSH and LH, these follicles underwent dramatic morphological changes, which ultimately led to the formation of antral follicles and the production of oocytes. At the initial stage of invitro culture (IVC)/maturation (IVM) of follicles, a high level of LH or FSH in the medium Abstract of the 8th Royan International Twin Congress, Tehran, Iran, 5-7 September 2007 34 Yakhteh Medical Journal, Vol 9, Sup 1, Summer 2007 facilitates E2 sevretion, enhances granulosa cell (GC) outgrowth, consequently leading to earlier antral formation. However, prolonged culture in high LH and FSH triggers early differentiation and luteinization of GCs, resulting in fewer metaphase II oocytes and blastocysts. Under the optimal concentration of LH (10mIU/ml) and FSH (100mIU/ml), follicular E2 production associated with matured oocytes was significantly higher than that of immature ones. Furthermore, matured follicles producing E2 with the range of 60- 80ng/ml produced oocytes of highest quality. Approximately 89% of MII oocytes showed an optimal level of E2 prior to ovulation and all of them were able to be fertilized and develop into blastocysts; wheras those oocytes producing a undesirable level of E2 degenerated progressively. In summary, active somatic cell steroidogenesis prior to ovulation and an ideal steroid milieu at ovulation are critical for the gereration of competent oocytes after follicular maturation invitro.