Experiments were conducted to determine when during perinatal development testicular steroids act in ferrets to promote the organization of a bilateral nucleus in a medial position at the border of the preoptic area (POA) and anterior hypothalamus (AH), henceforth referred to as the male nucleus of the POA/AH (MN-POA/AH). The formation of the MN-POA/AH was promoted in female offspring by treating their mothers with testosterone over the last 11 days of the 42-day gestation period, whereas MN-POA/AH formation was not disrupted in males castrated within 1, 2 or 5 days of birth. Additional experiments were conducted to determine whether the active hormone which induces differentiation of the MN-POA/AH in the male ferret is an androgen or an estrogen. MN-POA/AH formation was inhibited in males deprived prenatally of estrogenic stimulation via maternal ovariectomy and subcutaneous implantation of the aromatase inhibitor l,4,6-androstatriene-3,17-dione (ATD) on gestational day 30. By contrast, MN-POA/AH formation was not disrupted in males exposed prenatally to the antiandrogen flutamide. These results imply that estrogen, derived from the neural aromatization of circulating testosterone, acts prenatally to promote the organization of the MN-POA/AH in male ferrets. The development of sex-dependent features of forebrain morphology may depend on the neural action of estrogen in males of diverse mammalian species.