In the mammalian embryo, both sexes are initially morphologically indistinguishable: specific hormones are required for sex-specific development. Mullerian inhibiting substance and testosterone secreted by the differentiating embryonic testes result in the loss of female (Mullerian) or promotion of male (Wolffian) reproductive duct development, respectively. The signalling molecule Wnt-4 is crucial for female sexual development. At birth, sexual development in males with a mutation in Wnt-4 appears to be normal; however, Wnt-4-mutant females are masculinized-the Mullerian duct is absent while the Wolffian duct continues to develop. Wnt-4 is initially required in both sexes for formation of the Mullerian duct, then Wnt-4 in the developing ovary appears to suppress the development of Leydig cells; consequently, Wnt-4-mutant females ectopically activate testosterone biosynthesis. Wnt-4 may also be required for maintenance of the female germ line. Thus, the establishment of sexual dimorphism is under the control of both local and systemic signals.