Cellular mechanisms that contribute to low estradiol concentrations produced by the preovulatory ovarian follicle in cattle with a compromised metabolic status are largely unknown. To gain insight into the main metabolic mechanisms affecting preovulatory follicle function, two different animal models were used. Experiment 1 compared Holstein-Friesian nonlactating heifers (n = 17) and lactating cows (n = 16) at three stages of preovulatory follicle development: 1) newly selected dominant follicle in the luteal phase (Selection), 2) follicular phase before the LH surge (Differentiation), and 3) preovulatory phase after the LH surge (Luteinization). Experiment 2 compared newly selected dominant follicles in the luteal phase in beef heifers fed a diet of 1.2 times maintenance (M, n = 8) or 0.4 M (n = 11). Lactating cows and 0.4 M beef heifers had higher concentrations of β-hydroxybutyrate, and lower concentrations of glucose, insulin, and IGF-I compared with dairy heifers and 1.2 M beef heifers, respectively. In lactating cows this altered metabolic environment was associated with reduced dominant follicle estradiol and progesterone synthesis during Differentiation and Luteinization, respectively, and in 0.4 M beef heifers with reduced dominant follicle estradiol synthesis. Using a combination of RNA sequencing, Ingenuity Pathway Analysis, and qRT-PCR validation, we identified several important molecular markers involved in steroid biosynthesis, such as the expression of steroidogenic acute regulatory protein (STAR) within developing dominant follicles, to be downregulated by the catabolic state. Based on this, we propose that the adverse metabolic environment caused by lactation or nutritional restriction decreases preovulatory follicle function mainly by affecting cholesterol transport into the mitochondria to initiate steroidogenesis.