The formation of the testis or ovary is a critical step in development. Alterations in gonadal development during fetal or postnatal life can lead to intersexuality or infertility. Several model systems have been particularly useful in studying gonadal differentiation, the eutherian mammal and amphibia, fish, and birds. However, marsupials provide a unique opportunity to investigate gonadal development and the interactions of genes and hormones in gonadal differentiation and germ cell development in all mammals. On the one hand the genetic mechanisms appear to be identical to those in eutherian mammals, including the testis-determining SRY gene. On the other hand, marsupials retain in part the plasticity of the amphibian gonad to hormonal manipulation. It is possible to induce female to male and also male to female gonadal sex reversal in marsupials by hormonal manipulation, and oestradiol can induce male germ cells to enter meiosis at the time the oogonia do. In addition, in marsupials the development of the scrotum and mammary glands are independent of testicular androgens and instead are controlled by a gene or genes on the X-chromosome. Thus marsupials provide a number of opportunities for manipulating the sexual differentiation of the gonads that are not possible in eutherian mammals and so provide a unique perspective for understanding the common mechanisms controlling sexual development.