17α-Methyltestosterone (MT) is a widely used androgen for all-male fish production in aquaculture. However, the molecular mechanism underlying MT-induced masculinization remains unclear. In this study, we aim to identify the key gene responsible for MT-induced masculinization using the Nile tilapia (Oreochromis niloticus) amhy, dmrt1, and gsdf mutants, which exhibit male-to-female sex reversal. Nile tilapia fry from these three mutant lines were treated with 50 μg/g MT from 5 to 30 days after hatching (dah). The results showed that amhy and gsdf mutants, but not dmrt1 mutants, were masculinized by the MT treatment. Gonadal transcriptome analysis revealed that genes involved in steroidogenesis and germ cell development in MT-treated dmrt1 mutants exhibited a similar expression pattern to that of the wild type (WT) XX. In addition, the dmrt1 mutants cannot be masculinized by co-treatment with MT and the aromatase inhibitor fadrozole. The MT treatment completely blocked early steroidogenic enzyme (Star2, Cyp17a2, and Cyp19a1a) expression independent of amhy, gsdf, and dmrt1. A luciferase analysis showed that MT directly suppressed basal and Sf-1-activated cyp19a1a promoter activity through ara and arb in cultured HEK293 cells. Furthermore, MT treatment inhibited germ cell proliferation in amhy and gsdf mutants but not in dmrt1 mutants. Consistently, dmrt1 expression was induced in MT-treated WT XX, -amhy, and -gsdf mutants. Taken together, these results suggest that dmrt1 is indispensable for MT-induced masculinization in Nile tilapia and that MT functions by inhibiting early steroid synthesis and activating dmrt1 to promote testis development.