The ontogeny of Müllerian Inhibiting Substance (MIS) production was studied in the immature developing rat ovary using immunohistochemistry and bioassay. In a graded organ culture assay, in which regression of the Müllerian duct of the 14 1/2-day rat fetus was used as a measure of bioactivity, MIS could not be detected in ovarian fragments from fetal rats. After birth, however, MIS bioactivity first became detectable at 4 days of age. Fragments from ovaries of rats 7 days of age and older contained moderate levels of MIS activity which remained detectable throughout the prepubertal period, although extreme individual variability was characteristic. A rabbit polyclonal antibody against human recombinant MIS was used to localize MIS in rat ovarian tissue. Avidin-biotin enhanced immunoperoxidase staining could not detect MIS in the 15-day fetal or 1 day postnatal ovary, where no follicular growth was noticed. In ovaries from rats 1 week or older, where follicular growth was apparent, MIS could be localized specifically and exclusively in the cytoplasm of granulosa cells. MIS was found more in the innermost layers of granulosa cells than in the peripheral layers in preantral follicles. In antral follicles, MIS was found predominantly in the cumulus oophorus cells and periantral cells. In these developing ovaries, MIS could not be found in follicles with features of atresia.