The developmental fate of male and female cells in the ovary and testis was evaluated by injecting blastodermal cells from Stage X (Eyal-Gliadi and Kochav, 1976: Dev Biol 49:321-337) chicken embryos into recipients at the same stage of development to form same-sex and mixed-sex chimeras. The sex of the donor was determined by in situ hybridization of blastodermal cells to a probe derived from repetitive sequences in the W chromosome. The sex of the recipient was assigned after determination of the chromosomal composition of erythrocytes from chimeras at 10, 20, 40, and 100 days of age. If the sex chromosome complement of all of the erythrocytes was the same as that of blastodermal cells from the donor, the sex of the recipient was assumed to be the same as that of the donor. Conversely, if the sex-chromosome complement of a portion of the erythrocytes of the chimera differed from that of the donor blastodermal cells, the sex of the recipient was assumed to differ from that of the donor. Injection of male blastodermal cells into female recipients produced both male and female chimeras in equal proportions whereas injection of female cells into male recipients produced only by male chimeras. One phenotypically male chimera developed with a left ovotestis and a right testis although sexual differentiation was usually resolved into an unambiguous sexual phenotype during development when ZZ and ZW cells were present in a chimera. Donor cells contributed to the germline of 25-33% of same-sex chimeras whereas 67% of male chimeras produced by injecting male donor cells into female recipients incorporated donor cells into the germline. When ZW cells were incorporated into chimeric males, W-chromosome-specific, DNA sequences were occasionally present in DNA extracted from semen. To examine the potential of W-bearing spermatozoa to fertilize ova, males producing ZW-derived offspring and semen in which W-chromosome-specific DNA was detected by Southern analysis were mated to sex-linked albino hens. Since sex-linked albino female progeny were not obtained from this mating, it was concluded that the W-bearing sperm cells were unable to fertilize ova. The production of Z-derived, but not W-derived, offspring from ZW spermatogonia indicates that female primordial germ cells can become spermatogonia in the testes. In the testes, ZW spermatogonia enter meiosis I and produce functional ZZ spermatocytes. The ZZ spermatocytes complete the second meiotic division, continue to differentiate during spermiogenesis, and leave the seminiferous tubules as functional spermatozoa. By contrast, the WW spermatocytes do not appear to complete spermiogenesis and, therefore, spermatozoa bearing the W-chromosome are not produced. When cells from male embryos were incorporated into a female chimera, ZZ "oogonia" were included within the ovarian follicles and the chromosome complement of genetically male oogonia was processed normally during meiosis. Following ovulation, the male-derived ova were fertilized and produced normal offspring. This is the first reported evidence that genetically male avian germ cells can differentiate into functional ova and that genetically female germ cells can differentiate into functional sperm.