Dominant follicles are characterized by low levels of low molecular weight insulin-like growth factor binding proteins (IGFBPs) and by proteolytic activity against IGFBP-4 and -5. To examine the hypothesis that proteolysis of IGFBP-4 and -5 plays a critical role in selection of the dominant follicle, we isolated follicles at various stages during the first wave of follicular development during the bovine estrous cycle, using ultrasonography to follow follicular growth. Ovariectomies were performed before divergence in follicular size (Group 1; largest follicle 7 mm in diameter), at about the expected time of size divergence (Group 2; largest follicle 8 mm) or after a dominant follicle was clearly present (Group 3; largest follicle 9 mm). The four largest follicles (F1-F4) were dissected and concentrations of steroids, IGFBPs and free IGF-I and levels of proteolytic activity for IGFBP-4 and -5 in the follicular fluid were determined. Follicles in Group 1 did not differ significantly in size or estradiol concentrations, but levels of proteolytic activity against IGFBP-4 and -5 were higher in F1-F2 than in F3-F4. However, in Group 2 the largest follicle (F1) had higher estradiol, free IGF-I, and IGFBP-4 and -5 proteolytic activity than F2-F4, whereas only slight (dissected) or no (ultrasound) differences in diameters could be detected. Differences between F1 and F2-F4 in diameter, estradiol, free IGF-I, and IGFBP-4 and -5 proteolytic activity were even greater in Group 3. In addition, the hormonal regulation of IGFBP-4 and -5 proteolysis was evaluated in vivo by injecting heifers with small doses of rbFSH to induce codominant follicles (Group 4). The induced codominant follicles were larger and had higher IGFBP-4 and -5 proteolytic activity than subordinate follicles. The results suggest that follicular selection is a progression of changes starting with acquisition of an FSH-inducible IGFBP-4/-5 proteolytic activity, leading to an increase in intrafollicular concentration of free IGF-I that, in turn, synergizes with FSH to promote greater estradiol production by the follicle destined for dominance.