Progesterone has long been considered the primary mediator of Xenopus oocyte maturation. We have recently shown, however, that androgens, which are equal or more potent promoters of maturation and are present at higher levels in ovulating frogs, may also be playing an important physiologic role in mediating maturation. Here, we examined the role of CYP17, a key enzyme mediating sex steroid synthesis, in Xenopus ovarian androgen production. We found that the 17,20-lyase activities of Xenopus CYP17 exceeded the 17alpha-hydroxylase activities in both the Delta4 and Delta5 pathways; thus, Xenopus CYP17 rapidly converted pregnenolone and progesterone to dehydroepiandrosterone (DHEA) and androstenedione, respectively. This remarkably robust activity exceeds that of CYP17 from most higher vertebrates, and likely explains why virtually no progesterone is detected in ovulating frogs. Additionally, ovarian CYP17 activity was present exclusively in oocytes, although all other enzymes involved in sex steroid production were expressed almost entirely in surrounding follicular cells. This compartmentalization suggests a "two-cell" model whereby Xenopus ovarian androgen production requires both follicular cells and oocytes themselves. The requirement of oocytes for ovarian androgen production further introduces the unusual paradigm whereby germ cells may be responsible for producing important steroids used to mediate their own maturation.