Several clinical studies have shown a correlation of hypersecretion of LH and polycystic ovary syndrome (PCOS), infertility, and miscarriage in women, suggesting that chronically elevated LH impairs fertility. Growth arrest of small antral follicles in PCOS is also assumed to be associated with an abnormal endocrine environment involving increased LH stimulation, a hyperandrogenic milieu, and subsequent dysregulated FSH action in the ovarian follicles. In this study, we examined whether and how LH modulates follicular development and steroid production during preantral-early antral follicle transition by using a rat preantral follicle culture system. LH augments testosterone and estradiol production in preantral follicles via up-regulating mRNA abundance of CYP17A1 and CYP19A1. LH promotes rat preantral follicle growth, and the follicular size reaches that of early antral follicles in vitro, a response attenuated by the specific androgen receptor antagonist and a targeted disruption of androgen receptor gene. Sustained follicle stimulation by LH, but not by androgen, decreases FSH receptor mRNA levels and FSH receptor signaling and inhibits FSH-induced follicular growth. The data suggest that LH promotes preantral-early antral transition via the increased synthesis and growth-promoting action of androgen. However, chronic LH stimulation impairs FSH-dependent antral follicle growth by suppressing granulosa cell FSHR expression via the modulation of intraovarian regulators, including LH-induced thecal factors.