In 1984, 31 per cent of 437 ram lambs reared on one property were found to have either bilateral or unilateral testicular hypoplasia. Similar numbers of ram lambs were reared in the next three years and 13, 2 and 0.5 per cent were affected. Severely abnormal testicles typically produced no spermatozoa and presented a 'Sertoli cell only' picture. Sixty-six of 200 ewe lambs born in 1984 were not marked by a harnessed teaser before mating; 12 of these were examined further and eight were found to have bilateral ovarian hypoplasia. The ovaries were very small and contained no oocytes or follicles. Plasma gonadotrophin levels were higher than normal in bilaterally affected rams and ewes but plasma testosterone and inhibin concentrations in rams with bilateral hypoplasia were not significantly different from those in normal rams. A genetic cause of the gonadal hypoplasia was considered unlikely in view of the pattern of occurrence and an examination of the flock pedigrees. No environmental cause was found. Two environmental sources of toxins were considered worthy of further investigation; onion grass (Romulea species) with its leaf spot fungus Helminthosporium biseptatum and the water supply which could have contained high concentrations of arsenic or other toxins during the period when the mothers of the affected lambs were in early pregnancy.