The present study described the changes of steroidogenic cells accompanied the ovarian maturation in flathead grey mullet, Mugil cephalus, from Al-Bardawil lagoon. Here, five periods of ovarian development including previtellogenesis, vitellogenesis (early, mid, and late), and pre-spawning ones were successfully obtained from mullet female inhabiting Al-Bardawill lagoon. In addition, abnormal feature of atresia was noticed in the vitellogenic stages of the ovaries. In atretic follicles, the granulosa cells converted into active phagocytic cells digesting and consuming the yolk in those oocytes. The histochemical and ultrastructural observations showed that the follicular cells, theca and granulosa of the developing oocytes are the site of the sex hormones synthesis. Both theca and granulosa have manifested both quantitative and qualitative alterations concomitant during oogenesis as reflected by an obvious increase in number, size, and content of lipid droplets of those cells. In conclusion, the present observations show the histological and ultrastructural changes of steroidogenic cells during ovarian maturation and atresia of the grey mullet. This new information is essential for managing and preserving Al-Bardawil lagoon as a natural source of mullet broodstock and for achieving sustainable development for this fish.