Internal fertilization occurs inside the female body. In this process, the sperm is deposited inside the female reproductive tract, where it meets and fertilizes the egg. This method of reproduction is seen in many animals, including mammals, reptiles, and some fish.

Option 2, which states fertilization occurs outside the female body, is incorrect. External fertilization occurs in some aquatic animals, where the male releases sperm into the water and the female releases her eggs.

Option 3, which states fertilization occurs inside the male body, is also incorrect. Fertilization involves the fusion of the male sperm and female egg, which typically happens inside the female body.

Option 4, which states fertilization occurs outside the male body, is also incorrect. In internal fertilization, the male deposits sperm inside the female body, not outside.

Therefore, the correct answer is option 1, which states that internal fertilization occurs inside the female body.