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During gonadal sex determination, the supporting cell lineage differentiates into Sertoli cells in males and pre-granulosa cells in females. Recently, single cell RNA-seq data have indicated that chicken steroidogenic cells are derived from differentiated supporting cells. This differentiation process is achieved by a sequential upregulation of steroidogenic genes and downregulation of supporting cell markers. The exact mechanism regulating this differentiation process remains unknown. We have identified TOX3 as a previously unreported transcription factor expressed in embryonic Sertoli cells of the chicken testis. TOX3 knockdown in males resulted in increased CYP17A1-positive Leydig cells. TOX3 overexpression in male and female gonads resulted in a significant decline in CYP17A1-positive steroidogenic cells. In ovo knockdown of the testis determinant DMRT1 in male gonads resulted in a downregulation of TOX3 expression. Conversely, DMRT1 overexpression caused an increase in TOX3 expression. Taken together, these data indicate that DMRT1-mediated regulation of TOX3 modulates expansion of the steroidogenic lineage, either directly, via cell lineage allocation, or indirectly, via signaling from the supporting to steroidogenic cell populations.