Gonadal development was studied in mouse embryos that were exposed to cadmium during the early organogenesis stages. At 13.5 days, both the male and the female embryos had small genital ridges. Fewer primordial germ cells were found in the male embryos. In both sexes, many primordial germ cells were left outside the genital ridges, presumably as a result of retarded cell migration. In 16.5-day embryos, the size of the testes and ovaries and the number of differentiating germ cells were reduced. Many germ cells degenerated during the differentiation to spermatogonia and meiotic oocytes. The perturbed gonadal development was less likely to be caused primarily by a defective hypothalamopituitary axis but was more a part of the general cadmium-induced damage. The fertility of the male offspring was impaired by the prenatal cadmium insult, but the females were apparently fertile. The epididymal spermatozoa of the cadmium-affected offspring showed a lower fertilizing capacity in vitro. The impaired fertility of the cadmium-affected mice was the result of poor gonadal growth, paucity of germ cells, and defective maturation of the gametes.