Exogenous factors such as temperature, social behavior, and salinity play a crucial role during the critical sensitive period of sex differentiation in many vertebrates. In fishes, amphibians, and reptiles temperature treatment is known to induce all-male (or female) individuals, and genes related to sex differentiation have been studied. The Japanese pufferfish, Takifugu rubripes, possesses the most compact genome among vertebrates and has immense potential for studies focusing on comparative genome analysis. In this study, we describe gonadal morphology and vasa (germ cell marker) and dmrt1 (Sertoli cell marker) expression on a molecular level in relation to the development of temperature-treated pufferfish. To investigate the relationship between temperature and gonadal development, pufferfish were exposed to high-temperature conditions (32 degrees C) during early gonadal development. Morphological observations showed that this high-temperature treatment did not influence sexual differentiation as determined by ovarian cavity characteristics; however, high-temperature treatment induces gonadal degeneration that is devoid of germ cells. RT-PCR results revealed no vasa expression within germ cell-degenerated gonads. In situ hybridization results showed that dmrt1 was expressed in somatic cells of germ cell-degenerated ovaries. These results suggest that high-temperature treatment during early gonadal development induces germ cell degeneration and masculinization of ovarian somatic cells in pufferfish.