1. There are numerous sites in the nervous system where steroid hormones dramatically influence development. Increasing interest in mechanisms in neural development is providing avenues for understanding how gonadal steroids alter the ontogeny of these regions during sexual differentiation. 2. An increasing number of researchers are examining effects of gonadal steroids on neurite outgrowth, cell differentiation, cell death, cell migration, and synaptogenesis. The interrelated timing of these events may be a key aspect influenced by gonadal steroids throughout development. 3. The preoptic area and hypothalamus are characteristically heterogeneous in terms of cell type (e.g., different neuropeptides) and cell derivation. Perhaps a major reason for the ontogeny of sexual differences in the preoptic area and hypothalamus lies in the convergence of many different cell types from diverse sources (i.e., proliferative zones surrounding the lateral and third ventricles, and the olfactory placodes) that can be influenced in an interactive manner by gonadal steroid mechanisms. 4. The characterization of multiple mechanisms (e.g., trophic, migratory, apoptotic, fate, etc.,) that contribute to permanent changes in brain structure and ultimately function is essential for unraveling the process of sexual differentiation.