Mac OS X has Apache and PHP built in. I installed MySQL and set up a localhost WordPress install on it. Everything looked good, until I tried to enable pretty permalinks. The pretty links just didn’t work.
The Codex page indicates that FollowSymLinks must be enabled and AllowOverride should be All (or FileInfo). I tried putting that into the httpd.conf file but that didn’t work.
It took a while to realise that I was putting those directives into the section for the web root directory and not the user specific folder where I had actually put the site. Following the trail of includes in the well commented config files, I found my user Apache config in /etc/apache2/users/.conf
Added those options into the config file and permalinks are working 🙂
EDIT: Upgraded to OSX Mountain Lion and it uses a different set of configuration files. It looks like user config files aren’t created by default so I just changed the default directive.