Targeted disruption of the inhibin α gene (Inha^–/–) in mice results in an ovarian phenotype of granulosa cell tumors that renders the animals infertile. Little is known about the reproductive defects prior to tumor development. Here, we report novel data on early follicle dynamics in Inha^–/– mice, which demonstrate that inhibin α has important consequences upon follicle development. Morphological changes in both germ and somatic cells were evident in postnatal day 12 ovaries, with Inha^−/− mice exhibiting numerous multilayered follicles that were far more advanced than those observed in age-matched controls. These changes were accompanied by alterations in follicle dynamics such that Inha^−/− ovaries had fewer follicles in the resting pool and more committed in the growth phase. Absence of inhibin α resulted in advanced follicular maturation as marked by premature loss of anti-Müllerian hormone (AMH) in secondary follicles. Additionally, gene expression analysis revealed changes in factors known to be vital for oocyte and follicle development. Together, these data provide key evidence to suggest that regulation of the inhibin/activin system is essential for early folliculogenesis in the prepubertal mouse ovary.