Increased activation of ovarian primordial follicles in Erβ knockout (ErβKO) rats becomes evident as early as postnatal day 8.5. To identify the ERβ-regulated genes that may control ovarian primordial follicle activation, we analyzed the transcriptome profiles of ErβKO rat ovaries collected on postnatal days 4.5, 6.5, and 8.5. Compared to wildtype ovaries, ErβKO ovaries displayed dramatic downregulation of Indian hedgehog (Ihh) expression. IHH-regulated genes, including Hhip, Gli1, and Ptch1, were also downregulated in ErβKO ovaries. This was associated with a downregulation of steroidogenic enzymes Cyp11a1, Cyp19a1, and Hsd17b1. The expression of Ihh remained very low in ErβKO ovaries despite the high levels of Gdf9 and Bmp15, which are known upregulators of Ihh expression in the granulosa cells of activated ovarian follicles. Strikingly, the downregulation of the Ihh gene in ErβKO ovaries began to disappear on postnatal day 16.5 and recovered on postnatal day 21.5. In rat ovaries, the first wave of primordial follicles is rapidly activated after their formation, whereas the second wave of primordial follicles remains dormant in the ovarian cortex and slowly starts activating after postnatal day 12.5. We localized the expression of Ihh mRNA in postnatal day 8.5 wildtype rat ovaries but not in the age-matched ErβKO ovaries. In postnatal day 21.5 ErβKO rat ovaries, we detected Ihh mRNA mainly in the activated follicles in the ovaries’ peripheral regions. Our findings indicate that the expression of Ihh in the granulosa cells of the activated first wave of ovarian follicles depends on ERβ.