Follicular development and differentiation are sequential events which are tightly regulated by endocrine hormones, intraovarian regulators and cell-cell interactions. Balanced cell proliferation and apoptosis play an important role in the selection of dominant follicle. The formation of primordial follicle is initiated after a migratory primordial germ cell establishes a transitory close contact with the somatic cells in the genital ridge. Primordial germ cell migration and homing within the gonadal ridge requires integrated signals involving contact of primordial germ cells with extra-cellular matrix proteins and cellular substrates and attraction by the developing gonads. The oocyte-secreted polypeptide growth factors, such as the growth and differentiation factor 9, bone morphogenetic proteins and the gap junction participate in cell-cell communication direct growth and differentiation of granulosa cells and cross-talk between oocyte and somatic cell in the ovary. Maturation of cumulus-oocyte complexes which is controlled by lutenizing hormone requires activation of mitogen-activated protein kinase in granulosa cells. In this review the insights gained on cell-cell interaction and signal transduction during follicular development and differentiation is summarized, mainly focusing on signaling factors produced by oocyte and somatic cells which regulate primordial follicular growth initiation and development.