The embryonic gonad is capable of becoming either an ovary or testis. Ovarian development will result without specific signals from the Y chromosomal SRY gene, also known as the testis determining factor. An embryonic gonad needs to express a functional SRY gene in order to become a testis.
The SRY gene, also known as the testis determining factor, can be mutated or it can be transferred to an X chromosome. If an XY embryo lacks a functional SRY gene, a normal (although infertile) female will develop. If an XX embryo possesses an SRY gene, a normal male will develop. There are genes which apparently act in gender differentiation downstream of the function of the SRY gene. Mutations or duplications in these genes can cause sex reversal (usually in males but partial sex reversal is also possible in females), regardless of chromosomal gender or the presence of SRY. Some mutations produce pseudohermaphrodites.

The sex-determining SRY gene is a member of the SOX gene family. SOX genes have been conserved in coleomates and Drosophila. DSox14 is similar to SRY (Sparkes, 2001). In vertebrates, a number of SOX genes can expressed in the gonads including Sox 5, 6, 8, 9, 17, 20, 23, 24, and 30. A duplication of a SOX gene, probably the ancestor of SOX3, gave rise to a gene named SRY which is not only expressed in the testis, but is the testis determining factor located on the Y chromosome of therian mammals (placentals and marsupials). To date, the SRY gene has not been identified in monotremes. It is present in marsupials, although it has not been demonstrated to function in sex determination. Genes other than SRY can determine gender, given that some placental mammals lack SRY and that the majority human XY females do not have mutations in the SRY gene (Pask, 2000). By the origin of the mammalian lineage, three additional genes (Sry, Sox15, and Sox30) had evolved in the SOX family (Koopman, 2004). SRY lacks introns, as does SOX3, the gene to which it is most similar and from which it may have evolved.
SRY is located on Yp11 and is the tdf gene-the testes determining factor. An XY individual with a mutation in SRY can develop as a normal female although typically there are no menses (in one case, menstrual cycles occurred but there were no follicles). Some of the mutations of SRY which lead to the development of XY females are known to interfere with the protein's ability to bend DNA rather than bind DNA (Koopman, 1999). A fifth of human XY females possess mutations in the HMG box of SRY (Nagai, 2001). In mice, such females can be fertile but the ovaries fail early in life. An XX individual with the SRY gene translocated to one of the X chromosomes develops as a male. SRY is sufficient to initiate male development in mice which are chromosomally female (XX) (Holmes, 1996). Mutations in the SRY gene during development can produce true hermaphrodites: individuals with both male and female tissue. SRY interacts with a number of autosomal genes which can determine the effects of mutations. A father with a mutant SRY gene may be male, but can produce an XY daughter due to differences in the genetic background of these autosomal genes (OMIM).
SRY is most highly expressed in the genital ridge in the 6 week male prior to testis formation human embryo and is limited to the testis in adult males (Magararit, 1998). SRY initiates the differentiation and production of Sertoli cells, migration of cells from the mesonephros into the testis, and development of male pattern of blood vessels (Tilmann, 2002). The early embryonic gonads are capable of differentiating in male or female specific pathways. SRY causes the development of Sertoli cells from cells which would otherwise have formed follicular cells (although the presence of PCGs is also required for the formation of follicular cells) (Tilmann, 2002).
Interestingly, SRY has been modified or lost in some mammalian groups. An intron has been inserted in the SRY gene of dasyurid marsupials, apparently without altering its function (O'Neill, 1998). Mole voles do not use SRY or SOX9 to determine gender. There must be an additional testis determining factor as yet unknown in them (Baumstark, 2001). Males and females of the rodent Tokudaia osimensis have the same karyotype, lacking a Y chromosome. This species does not involve the gene Sry in sex determination as does the rest of its subfamily (Murniae, Family Muridae). Similarly, two species of the rodent genus Ellobius do not use Sry in sex determination, have identical karyotypes in males and females, and thus are unlike the other members of their subfamily (Arvicolinae, Family Muridae) (Soullier, 1998; Just, 1995).

Reptilian homologs of AMH, DAX1, SF1, SOX9, and WT1 seem to function similarly to those proteins in mammals (Pleau, 1999; Shimada, 1998). The enzyme 3ß-hydroxysteroid dehydrogenase-5-ene-4-ene isomerase (3ß HSD) is important in steroid synthesis and has a temperature sensitive activity (Pleau, 1999). The activity of aromatase which converts androgen to estrogen seems to be an important feature of temperature sensitive sex determination in reptiles. Aromatase is also temperature sensitive. Both these enzymes vary in their activity at male vs. female-producing incubation temperatures (Pleau, 1999).
A number of genes determine the differentiation of reproductive tissues into male or female specific patterns. Mutations in these genes can cause sex reversal or the development of some type of intersex phenotype. Intersex individuals have been described in goats, llamas, sheep, pigs, pandas, dogs, cats, raccoon dogs, whales, moles, rabbits, kangaroos, wallabies, opossums, horses, mice, voles, lemmings, and humans (Vaiman, 2000). The females of several species of the mole genus Talpa possess ovotestes, gonads with both ovarian and testicular tissue (Barrionuevo, 2004).

A number of genes are known to be involved in the differentiation of gonads. SF1 and WT1 are required for the genital ridge to become a bipotential gonad. SRY and SOX9 are required for this gonad to become a testis, after which point SF1 is required for testosterone production (and thus the maturation of male structures) and SF1 and AMH are required for the regression of Muellerian ducts. DAX1 is required for the production of the ovary and SF1 promotes the production of follicular cells (Ramikissoon, 1996).

SOX9 mutations cause feminization of XY individuals and autosomal sex reversal (Jordan, 2001, Vaiman, 2000) and may be a vestige of an older dosage-dependent mechanism for sex determination which predated the use of SRY as the testis determining factor (Foster, 1994). In birds and mammals, SOX9 is preferentially expressed in males and functions in testis differentiation. In frogs, it is expressed in both genders, seemingly involved in the development of both ovaries and testes (Takase, 2000).
SOX9 is expressed in the brain, heart, and testes. Sox9 is needed for the endochondral skull elements formed by cranial neural crest cells but not for intermembranous bone and that formed from mesoderm. Sox9 is involved in both chondrogenesis and sex determination. Mutations cause skeletal dysplasia (Mori-Akiyama, 2003; OMIM). SOX9 is essential for chondrocyte development and targets the enhancer of chondrocyte specific genes, such as collagen Col2a1 (Lefebvre, 1997/8).

The DAZ genes on the Y chromosome are important for fertility and deletions here are a common cause of male infertility. This Y specific chromosome cluster is thought to be derived from and ancestral gene on human chromosome 3 (DAZL) which is required for both male and female fertility in other organisms. Another autosomal gene (BOULE) may be the ancestor of DAZL and it is homologous to genes which regulate meiosis in invertebrates. BOULE was present in early bilateran animals, DAZL evolved early in the vertebrate lineage, and the Y-specific DAZ cluster evolved since the divergence of new world monkeys and human lineages (Xu, 2001).

There is an X-linked gene DAX-1 which, when present in two copies, can cause XY individuals with SRY to develop as females. It is a nuclear hormone receptor that binds to retinoic acid and regulates transcription. DAX-1 is not required for normal male development (Zanaria, 1994). DAX and SRY are thus antagonistic in their function. (Jordan, 2001). DAX inhibits Sertoli cell development (Clarkson, 2002).

Mutations in FGF9 in mice can cause a number of defects ranging from the underdevelopment of testes to sex reversal (in addition to effects in other tissues such as underdevelopment of lungs) (Colvin, 2001).

Mammalian WT1 can produce 24 different proteins through alternate splicing, alternate translational initiation sites, and RNA editing (Clarkson, 2002). WT1 upregulates SRY expression and can also activate BCL2, CDKN1A, and DAX1. WT1 mutations can cause complete sex reversal. (Clarkson, 2002). WT1 and SF1 are upstream of SRY (Magararit, 1998). WT1 possess four zinc finger domains and mutations are involved in four types of disorders: Wilms tumor, WAGR syndrome, Frasier Syndrome, and Denys-Drash Syndrome. All of these syndromes may include some aspects of sex reversal (Vaiman, 2000).
Wt1 is required for the production of both kidneys and gonads (Tilmann, 2002). Wnt family members act through Frizzled receptors (Jordan, 2001). Wnt-4 expression is maintained in developing ovaries but not developing testes. XX mice without Wnt-4 masculinization and persistence of rudimentary male ducts, and degeneration of female ducts. Overexpression of Wnt-4 in XY individuals results in female development (Jordan, 2001).

SF-1 is a orphan nuclear hormone receptor. Mutations can result in sex reversal and agenesis of the adrenal glands and gonads. Sex reversal can occur in heterozygous humans (Vaiman, 2000; (Jordan, 2001). SF1 functions upstream of SRY (Magararit, 1998). Some turtles have a gender specific SF1 expression pattern similar to mammals. SF1 has a similar pattern of expression in marsupials and placental mammals. It is involved in the development of the adrenal glands, anterior pituitary, and hypothalamus. It also regulates cytochrome 450 genes which are involved in steroid metabolism in ovaries and testes (Whitworth, 2001).

In mammals, the first step in sex determination is the differentiation of the gonads controlled by genes followed by a second step of phenotypic changes induced by hormones. Anti-Muellerian hormone is a member of the TGFß family which is required for male development (without which they develop as pseudohermaphrodites). Females exposed to AMH undergo partial sex reversal. Four transcription factors are known to bind to the AMH promoter: SF-1, WT1, SOX-9, and GATA-4 (Vaiman, 2000). Mullerian inhibiting substance is a member of the TGFß family which is expressed by Sertoli cells in developing testis (Tilmann, 2002).
In birds, androgens and Anti-Muellerian hormone are required for testicular development while estrogen is important for ovarian development. Sox9 may be the transcription factor which initiates the transcription of male genes and AMH (Shimada, 1998).

ATRX is a member of the helicase superfamily that is only found on the X chromosome. Mutations in humans can cause thalassemia, mental retardation, and sex reversal. An ATRY gene (on the Y chromosome) is known in marsupials and it expressed in the testes. ATRX is involved in gonadal development downstream of SRY, SOX9, and AMH. ATRX is not expressed in the marsupial testis (Pask, 2000).

M33, a homolog of Drosophila polycomb, can also cause sex reversal (Tilmann, 2002).