In the early juveniles of Ciona intestinalis, primordial germ cells arise on the degenerated mass of the resorbed tadpole tail, and assemble to form a discrete gonad rudiment. The present study elucidated the morphological sequences during differentiation of the gonad rudiment into the testis and ovary. In 11- to 12-day juveniles, the gonad rudiment, an elongate sac, divided into the testicular and ovarian rudiments. The testicular rudiment separated as a round vesicle from the thickened wall of the elongate sac. The original sac, after separation of the round vesicle, developed into the ovary. In the testicular rudiment, germ cells formed a continuous central mass without association of somatic cells, while in the ovarian rudiment, each germ cell was associated with somatic cells within the epithelium composing the wall of the rudiment. In 13- to 15-day juveniles the testicular rudiment changed into branched tubes ending in club-shaped follicles. Cells characterized by many flattened cisternae of rough endoplasmic reticulum (distal cells) constituted the distal wall of each follicle. Spermatogenic cells were freely present in the follicular lumen, but the largest spermatogonia were in contact with the distal cells. Both in the testicular and ovarian rudiments, germ cells entered meiosis in 18-day juveniles. A novel body (periesophageal body) was found just beneath the ventral margin of the esophageal opening. It comprised irregular follicles made up of one cell type whose cytoplasm, filled with round vesicles and Golgi complexes, was suggestive of an endocrine function. Fragments derived from the periesophageal body were present around the developing ovary.