The present study investigated the ovarian development of female banana shrimp, Penaeus merguiensis (n = 50), with a focus on external morphological and histological assessments. The findings indicated that P. merguiensis undergoes five distinct ovarian developmental stages: immature, premature, mature, fully mature, and spent. Externally, the ovaries changed in colour from transparent to whitish-yellow, light green, dark green, and finally white again from the immature to spent stages. Histologically, the presence of perinucleolar and yolkless oocytes characterised the immature and premature stages, whereas yolky oocytes predominated during the mature and fully mature stages. The gonadosomatic index (GSI) and oocyte size increased significantly from the immature to fully mature stages before decreasing significantly at the spent stage (p < 0.05). Understanding these ovarian developmental stages may contribute to the domestication and reproductive management of this species, particularly for broodstock maturation and seed production.