The development of unique cell types in multicellular organisms is achieved through careful coordination of gene expression, involving signalling, transcription factors and epigenetic modifications. Epigenetic modifications involve heritable chemical alterations to DNA or histone proteins (together termed chromatin) that regulate how chromatin is packaged within the nucleus, with substantial influence on cell identity and function. Polycomb Repressive Complex 2 (PRC2) is a widely conserved epigenetic modifier which catalyses the repressive modification Histone 3 Lysine 27 trimethylation (H3K27me3). While PRC2 regulates cell function and identity in many developmental contexts, whether PRC2 regulates somatic cell development and function in the ovary is unknown. Our characterisation of the core PRC2 subunits, EED, EZH2 and SUZ12, in the mouse ovary revealed that PRC2 is enriched in granulosa and theca cells of developing ovarian follicles. To investigate the function of PRC2 during folliculogenesis, we generated a mouse model with conditional deletion of Eed in somatic cells of the ovary. Deletion of Eed resulted in the arrest of follicles at the secondary stage, evidenced by abnormal expression of the cell cycle inhibitor p27kip1 and decreased expression of the proliferation marker PCNA in granulosa cells. Furthermore, Eed-null ovaries contained fewer steroidogenic cells marked by the steroidogenic enzymes HSD3B and CYP11A1, suggesting that steroid production is impacted in these females. Limited analysis of adult ovaries revealed severely compromised morphology, loss of growing follicles and sub-fertility following Eed deletion. These findings provide the first evidence that EED is a novel essential regulator of follicle development and female endocrine regulation. Our work generates important insights into epigenetic regulation of ovarian development, with potential implications for understanding disorders of female reproductive health for which abnormal granulosa cell function and steroid production have roles, such as granulosa cell tumours, primary ovarian insufficiency and infertility.