The formation of the testis or ovary is a critical step in development. The pioneering studies of Professor Alfred Jost showed that the hormones produced by the embryonic rabbit testis are essential for development of the male phenotype. Sexually dimorphic hormones play a key role in the transition from an undifferentiated gonad into the mature testis and ovary. Marsupials, with their altricial young, provide an accessible model for the study of sexual differentiation because most of these events occur postnatally, while the young are attached to teats within their mothers' pouches. The relatively long time-course for the marsupial sexual differentiation has provided an excellent opportunity to correlate morphological changes with the genes and hormones that control them. Using this model species we have demonstrated that not all sexual dimorphisms are controlled by hormones. Virilization of the prostate and phallus is androgen dependent but appears to rely on circulating 5α-androstane-3α,17β-diol which is converted to dihydrotestosterone in these target tissues. Collectively these studies have led to the development of new paradigms to explain the hormonal mechanisms mediating sexual differentiation.