The objective of this study was to test the hypothesis that supra-basal concentrations of progesterone during the follicular phase are associated with the development of follicular cysts. Twenty-five non-lactating dairy cows were used in the study, which was performed over five identical replicate trials. Luteolysis was induced during the mid-luteal phase. Transrectal ultrasonography was performed daily to determine the occurrence/timing of ovulation. Plasma samples were collected for progesterone, oestradiol and luteinizing hormone (LH) analysis. Three cows failed to ovulate (cystic anovulatory) but did ovulate in a subsequent replicate (cystic ovulatory). Eight cows from the appropriate replicates were used as control cows (normal group). Follicular growth patterns and plasma oestradiol concentrations were similar between the three groups. However, the plasma progesterone concentrations during the follicular phase were twofold higher in the cystic anovulatory group (P < 0.01). Furthermore, no LH surge was detected in these animals. While LH pulse amplitude was similar between groups, LH pulse frequency in the cystic anovulatory group was attenuated (P < 0.05). In conclusion, the formation of follicular cysts were preceded by elevated plasma progesterone concentrations and the suppression of the LH surge.