It has been hypothesized that steroid hormone production is involved in sexual differentiation of the gonads in reptiles with temperature-dependent sex determination. We have therefore examined steroidogenic enzymes and ovarian differentiation in Crocodylus porosus embryos incubated at 30°, a temperature producing 100% female hatchlings. Δ5-3β-Hydroxysteroid dehydrogenase (3β-HSD) activity was detected only in the adrenal gland before, during, and after the period of ovary differentiation. The same pattern was observed during testis differentiation in embryos incubated at 32° (predominantly male-producing). At no stage was 3β-HSD activity detected in the gonads. The tritiated water assay was used to measure aromatase enzyme activity in the gonad-adrenal-mesonephric complex (GAM) during development at 30°C. Aromatase activity in the GAM increased during the period of ovary differentiation. In female C. porosus hatchlings, 85% of the aromatase activity within the GAM was derived from the ovary, 10% from the adrenal, and 5% from the regressing mesonephros. The aromatase inhibitors aminoglutethimide and 4-hydroxyandrostenedione significantly reduced aromatase activity in female hatchling GAMs. In some stage 25 embryos incubated at 32.5°, aromatase activity was low in testes and high in ovaries. These observations show that urogenital tissues of C. porosus are steroidogenically active during gonadal differentiation and that increased aromatase enzyme activity accompanies ovary development at 30°. Steroid synthesis in the GAM of C. porosus embryos may involve interaction between the adrenal glands and the gonads.