Transfer RNA-derived small RNAs (tsRNAs) are novel regulatory small non-coding RNAs that have been found to modulate many life activities in recent years. However, the exact functions of tsRNAs in follicle development remain unclear. Follicle development is a remarkably complex process that follows a strict hierarchy and is strongly associated with reproductive performance in ducks. The process of converting small yellow follicles into hierarchal follicles is known as follicle selection, which directly determines the number of mature follicles. We performed small RNA sequencing during follicle selection in ducks and identified tsRNA-00764 as the target of interest based on tsRNA expression profiles in this study. Bioinformatics analyses and luciferase reporter assays further revealed that peroxisome proliferator-activated receptor-γ (PPAR-γ) was the target gene of tsRNA-00764. Moreover, tsRNA-00764 knockdown promoted estrogen and progesterone synthesis and lipid deposition in duck granulosa cells, while a PPAR-γ inhibitor reversed the above phenomenon. Taken together, these results demonstrate that tsRNA-00764, differentially expressed in pre-hierarchal and hierarchy follicles, modulates estrogen and progesterone synthesis and lipid deposition by targeting PPAR-γ in duck granulosa cells, serving as a potential novel mechanism of follicle selection. Overall, our findings provide a theoretical foundation for further exploration of the molecular mechanisms underlying follicle development and production performance in ducks.