Bone morphogenetic protein (BMP) 1 is a vertebrate metalloproteinase of the astacin family. BMP1 plays a key role in regulating the formation of the extracellular matrix (ECM), particularly by processing the C-propeptide of fibrillar procollagens. BMP1 also promotes BMP signaling by releasing BMP signaling molecules from complexes with the BMP-antagonist chordin. As a result of BMP1′s dual role in both ECM formation and BMP signaling, we hypothesized that BMP1 could play a role in ovarian physiology. Using the sheep ovary as a model system, we showed that BMP1 was expressed in the ovary throughout early fetal stages to adulthood. Furthermore, in adult ovaries, BMP1 was expressed along with chordin, BMP4, and twisted gastrulation, which together form an extracellular regulatory complex for BMP signaling. Within ovine ovaries, immunohistochemical localization demonstrated that BMP1 was present in granulosa cells at all stages of follicular development, from primordial to large antral follicles, and that the levels of BMP1 were not affected by the final follicle selection mechanism. In cultured granulosa cells, BMP1 expression was not affected by gonadotropins, but BMP4 and activin A had opposing effects on the levels of BMP1 mRNA. BMP1 appeared to be secreted into the follicular fluid of antral follicles, where it is able to exert procollagen C-proteinase and chordinase activities. Interestingly, BMP1 activity in follicular fluid decreased with follicular growth.