Development of the embryonic gonad is the first critical step in determining the reproductive functionality of the adult individual. Sexual ambiguity, infertility, or neoplasia arises when defects occur in early gonad development. The main goal of this proposal is to understand the fundamental process of gonad development, especially as regards the development of the ovary. Development of the mammalian ovary is considered as a default pathway, arising only in the absence of Sry-directed testis pathway. However, our recent findings revealed that the development of the ovary is a product of an active signaling cascade, involving complex cell-cell interaction and cell fate determination. We have identified two novel molecules, WNT4 and follistatin, that play critical roles during early ovary development. Wnt4 and follistatin null mice had identical defects in embryonic ovaries including formation of a testis-specific vasculature and loss of germ cells. Furthermore, we found that follistatin is the direct downstream effector of WNT4 to regulate the vasculature and germ cell development. We therefore hypothesize that WNT4 and follistatin are constituents of a novel signaling cascade to inhibit testis-specific vasculature and to maintain the survival of female germ cells in ovary development. We propose three specific aims to: 1) dissect the intracellular signaling pathways of WNT4; 2) understand the regulation and functions of follistatin in ovary development; and 3) establish the functional relationship between formation of the testis specific vasculature and germ cell loss in follistatin null gonads. By combining transgenic and organ culture techniques, we expect to decipher the molecular and cellular pathways for the development of the ovary and at the same time, identify the critical components susceptible to genetic defects in these pathways.