To investigate interactions between the basal metazoan Hydra viridis and its symbiotic Chlorella algae, we generated aposymbiotic hydra lacking algae and compared them to symbiotic ones with regard to growth and sexual differentiation. Under standard feeding conditions aposymbiotic polyps proliferated similarly to symbiotic polyps. Under moderate and low feeding conditions asexual growth was reduced in polyps lacking algae, indicating that the symbionts supply nutrients to their hosts. In addition, the Chlorella symbionts had a strong influence on the sexual reproduction of Hydra viridis: in most cases female gonads were produced only when symbiotic algae were present. Spermatogenesis proceeded similarly in symbiotic and aposymbiotic polyps. Since during oogenesis symbionts are actively transferred from endodermal epithelial cells to the ectodermal oocytes, this oogenesis promoting role could indicate that the symbionts are critically involved in the control of sexual differentiation in green hydra.