In birds, differentiation of embryonic gonads is not as strictly determined by the genetic sex as it is in mammals, and can be influenced by early manipulation with a sex steroid hormone. Thus administration of an aromatase inhibitor induces testis development in the genetic female, and administration of estrogen induces a left ovotestis in the genetic male embryo. Another feature of avian gonadogenesis is that only the left ovary develops in most species. Molecular mechanisms underlying these features at the level of gene expression have not been elucidated. In this paper, we present evidence that a gene for aromatase cytochrome P-450, an enzyme required for the last step in the synthesis of estradiol-17beta, is expressed in medullae of the left and right gonads of a female chicken embryo, but not in those of a male chicken embryo, and that an estrogen receptor gene is expressed only in epithelium (and cortex later, in the female) of the left, not the right, gonad of both sexes, but the expression in the male left gonad is temporary and restricted to an early stage of development. Differential expression of these two genes serves well to explain the above features of gonadal development in birds. Furthermore, in ovo administration of estradiol-17beta from the 5th to the 14th day of incubation does not cause expression of the estrogen receptor gene in the right gonad of chicken embryos of either sex, suggesting that the absence of expression of the estrogen receptor gene in the right gonad is not the result of down-regulation, but may be regarded as an important cause of the unilateral ovarian development.