AbstractHow is the embryonic bipotential gonad regulated to produce either an ovary or a testis? In males, transient early activation of the Y chromosome Sry gene makes both germ cells and soma male. However, in females, available evidence suggests that the process of ovary sex determination may take place independently in the germline and somatic lineages. In addition, in contrast to testis, in ovary somatic cells, female‐to‐male gonadal sex reversal can occur at times throughout ovary development and maturation. We suggest that a single gene pathway, likely hinging on the Foxl2 transcription factor, both initiates and maintains sex differentiation in somatic cells of the mammalian ovary. BioEssays 29: 15–25, 2007. Published 2006 Wiley Periodicals, Inc.