The purpose of these studies was to investigate the effects of melatonin on the production of steroids (progesterone, testosterone, and estradiol) and cAMP by preovulatory follicles and to examine changes in melatonin concentrations in the ovary during the estrous cycle. Adult cyclic hamsters were used in this study. Melatonin concentrations in the ovary, pineal gland, and serum were measured at mid-light and mid-dark during the estrous cycle. Effects of melatonin on steroidogenesis by preovulatory follicles, thecae, and granulosa cells were examined, and its effect on cAMP production by preovulatory follicles was also investigated. Melatonin (0.1-10 ng/ml) had no effect on steroid production in the absence of hCG, but melatonin decreased progesterone and estradiol production by preovulatory follicles in a dose-dependent and time-dependent manner in the presence of hCG (100 mIU/ml). The target of melatonin was thecae but not granulosa cells, and melatonin significantly reduced cAMP production by preovulatory follicles. Melatonin concentrations in the ovary showed a similar phasic variation with high levels during mid-dark and low during mid-light, as in the pineal gland and serum. These results show that the ovarian melatonin levels also exhibit a circadian rhythm and suggest that the high melatonin milieu in the ovary may induce gonadal regression in the cyclic hamster.