The growth and development of follicles within the ovary are highly dependent on autocrine and paracrine signaling involving growth factors from granulosa cells, theca cells, stromal interstitial cells, and the oocytes. The growth factor bone morphogenetic protein-4 (BMP-4) and its receptor (BMPR-IB) have been detected in ovaries, and a mutation in BMPR-IB has been associated with abnormal ovulation rate. The objective of the current study was to examine the role that BMP-4 plays in the early stages of primordial follicle development. Ovaries from 4-day-old rats were placed into a whole-ovary organ culture system for 2 wk to investigate the effect that treatment with exogenous BMP-4 has on early follicle development. BMP-4-treated ovaries had a significantly higher proportion of developing primary follicles and fewer arrested primordial follicles than did untreated controls. This indicates that BMP-4 promotes primordial follicle development and the primordial-to-primary follicle transition. Ovaries were also treated with neutralizing antibody against BMP-4 to determine effects of removing endogenously produced BMP-4. Interestingly, ovaries treated with BMP-4 antibody were markedly smaller than controls. This was associated with a progressive loss of oocytes and primordial follicles, a progressive increase in cellular apoptosis, and an accompanying loss of normal ovarian tissue morphology over time. Immunocytochemistry localized BMP-4 protein to isolated stromal cell populations, selected stromal cells (i.e., pretheca cells) associated with developing primordial follicles, and the basement membrane of follicles. Ovaries were treated with BMP-4 and RNA collected after organ culture to determine whether BMP-4 signaling affects expression of other growth factors. Kit ligand and basic fibroblast growth factor expression was unchanged, but TGFα expression was decreased in whole ovaries. Taken together, these data suggest that BMP-4 plays an important role in promoting the survival and development of primordial follicles in the neonatal ovary.