The mRNA differential display technique has become a popular method for isolating novel genes in a variety of biological systems including carcinogenesis, hormone regulation, plant biology and neurobiology. We have further developed the method by optimizing different steps for the use of small amounts of material, such that differential display can be used in the study of developmental biology. Our techniques include a new assay for elimination of false positive cDNA clones and a semi-quantitative reverse transcription-polymerase chain reaction (RT-PCR) method for the rapid analysis of differences in gene expression. This improved mRNA differential display strategy requires less than 4 microg of total RNA. We have used it for the isolation of genes which are expressed during gonad development in the mouse. One of the cDNAs found, cDNA 4.3 which corresponds to a part of the gene encoding the steroid hydroxylase 3betaHSD I, was shown to be a valuable marker for adrenal development and for Leydig cell differentiation and organization during testis development.