The negative energy balance (NEB) in dairy cows, early postpartum, is related to reduced fertility. A metabolic characteristic of NEB is elevated levels of free fatty acids (NEFA) in blood and follicular fluid with an effect on the cumulus-oocyte complex (COC; Leroy et al. 2005 Reproduction 130, 485-495, https://doi.org/10.1530/rep.1.00735; Aardema et al. 2011 Biol. Reprod. 85, 62-69, https://doi.org/10.1095/biolreprod.110.088815; Aardema et al. 2013 Biol. Reprod. 88, 164, https://doi.org/10.1095/biolreprod.112.106062). In this study, we investigated the effect of elevated NEFA levels on granulosa cells and consequently steroid production during NEB. Both 17β-oestradiol (E2) and progesterone (P4) levels in follicular fluid and oocyte competence were measured during NEB, as oocyte competence and steroid production are related (Aardema et al. 2013 Theriogenology 80, 576-583, https://doi.org/10.1016/j.theriogenology.2013.05.025). Heifers were directed towards a control (CTR; n=6) or NEB group (NEB; n=6; fasting heifer model; Jorritsma et al. 2003 Theriogenology). Cycle synchronization and superstimulation were performed as previously reported; invivo matured oocytes were, by ovariectomy at 22h after the induced LH peak, individually collected from follicles (≥8 to ≤20mm) and invitro fertilized and cultured until Day 8. Levels of nonesterified fatty acids (NEFAs) in follicular fluid were, in CTR, 80μM palmitic (C16:0), 70μM stearic (C18:0), and 100μM oleic acid (C18:1) and, in NEB, 150μM C16:0, 100μM C18:0, and 200μM C18:1 (Aardema et al. 2013 Biol. Reprod. Vol, page range). Follicular fluid of individual follicles was frozen and stored at −20°C until E2 and P4 radioimmunoassay analysis. At Day 5 and 8 of culture, embryos were scored for developmental competence, according to Aardema et al. (2013 Biol. Reprod. Vol, page range). Oocytes developing to a blastocyst all originated from follicles with, formerly in control animals defined, optimal follicular fluid levels of E2 ≤0.25 μM and P4 ≥0.26 μM (Aardema et al. 2013 Theriogenology 80, 576-583, https://doi.org/10.1016/j.theriogenology.2013.05.025). Overall E2 levels in follicular fluid in NEB appeared to be lower than those in CTR. There was a reduced positive value of 0.33 (vs. 0.49 in CTR) for predicting the competence of oocytes to develop into a blastocyst, and reduced specificity of 0.26 (vs. 0.75 in CTR) for oocytes originating from follicles with optimal steroid levels in NEB. The sensitivity and negative predictive value were 1.0 in both NEB and CTR. Levels of P4 in follicular fluid were unaffected by NEB. The lower level of E2 indicates an effect of NEB on steroid synthesis in granulosa cells. Recently, it was demonstrated that invitro exposure to monounsaturated C18:1, in contrast to saturated C16:0 or C18:0, resulted in reduced E2 production and expression of CYP19A1 in granulosa cells (Sharma 2018 Endocrine Connections 8, 493-505, https://doi.org/10.1530/EC-19-0011). These data suggest that elevated levels of NEFAs, C18:1 in particular, affect the function of granulosa cells and the follicular steroid environment of the COC, in contrast to the effect of C18:1 on the COC, which appears to protect the oocyte against lipotoxic events by saturated NEFAs by massive lipid accumulation in cumulus cells (Aardema et al. 2011 Biol. Reprod. 85, 62-69, https://doi.org/10.1095/biolreprod.110.088815; Aardema et al. 2013 Biol. Reprod. 88, 164, https://doi.org/10.1095/biolreprod.112.106062). Elevated levels of C18:1 may also result in increased lipid storage in granulosa cells and could affect the steroid synthesis of cholesterol that is also stored in lipid droplets. How elevated NEFA levels during the NEB affect granulosa cells is under investigation.