Regulatory networks driving morphogenesis of animal genitalia must integrate sexual identity and positional information. Although the genetic hierarchy that controls somatic sexual identity in the fly Drosophila melanogaster is well understood, there are very few cases in which the mechanism by which it controls tissue-specific gene activity is known. In flies, the sex-determination hierarchy terminates in the doublesex (dsx) gene, which produces sex-specific transcription factors via alternative splicing of its transcripts. To identify sex-specifically expressed genes downstream of dsx that drive the sexually dimorphic development of the genitalia, we performed genome-wide transcriptional profiling of dissected genital imaginal discs of each sex at three time points during early morphogenesis. Using a stringent statistical threshold, we identified 23 genes that have sex-differential transcript levels at all three time points, of which 13 encode transcription factors, a significant enrichment. We focus here on three sex-specifically expressed transcription factors encoded by lozenge (lz), Drop (Dr) and AP-2. We show that, in female genital discs, Dsx activates lz and represses Dr and AP-2. We further show that the regulation of Dr by Dsx mediates the previously identified expression of the fibroblast growth factor Branchless in male genital discs. The phenotypes we observe upon loss of lz or Dr function in genital discs explain the presence or absence of particular structures in dsx mutant flies and thereby clarify previously puzzling observations. Our time course of expression data also lays the foundation for elucidating the regulatory networks downstream of the sex-specifically deployed transcription factors.