We have characterized two transcripts from the male-determining her-1 locus in Caenorhabditis elegans. The larger transcript, which appears more important for male development, is predicted to encode a novel 175-amino-acid, cysteine-rich polypeptide with an apparent amino-terminal signal sequence and potential cleavage and glycosylation sites. Expression of a full-length cDNA construct for the larger transcript driven by a body-wall-myosin promoter causes extensive masculinization of all sexually dimorphic tissues in XX (normally hermaphrodite) animals. This activity is dependent on the presence of the her-1 signal sequence or a substitute synthetic signal sequence in the encoded polypeptide. These results suggest that a secreted product of the her-1 gene dictates male development. The primary signal for sex determination in Caenorhabditis elegans is the ratio of X chromosomes to autosomes (X/A ratio) (Nigon 1951; Madl and Herman 1979). Genotypes of XO (X/A = 0.5) and XX (X/A = 1.0) normally dictate male and hermaphrodite development, respectively. The two sexes show extensive dimorphism in most tissues: For example, males have a unilobed testis connected to the cloaca and a complex tail specialized for copulation, whereas hermaphrodites, which are selffertile, have a bilobed ovotestis connected to the vulva and a simpler tail (for review, see Hodgkin 1988). Genetic analysis has shown that the primary signal is interpreted through a regulatory cascade (Fig. 1) including seven autosomal genes that control somatic as well as germ-line sex determination (for review, see Hodgkin 1987; Hodgkin 1990) and three X-linked genes that regulate both these genes and the genes that mediate X chromosome dosage compensation (for review, see Villeneuve and Meyer 1990). Although molecular information on some of the corresponding gene products has recently become available (see above reviews and Discussion), the nature of the cascade and its relationship to other known developmental regulatory pathways is not yet clear.The her-1 gene, which is necessary for normal male development in XO animals (Hodgkin 1980), appears to be the point at which the X-linked regulatory genes control sex determination. The activity of her-l, in turn, controls activity of the terminal regulator tra-1 as shown in Figure 1, via tra-2, tra-3, and the fern genes, so that in an XO animal tra-1 function is repressed and male development is permitted. The her-1 gene is defined by 25 loss-of-function (If) mutations; most of these result in complete transformation of XO animals into self-fertile hermaphrodites and have no effect on XX animals (Hodgkin 1980;Trent et al. 1988). Weak If alleles can result in variably transformed intersexual XO animals.Two dominant gain-of-function (gf) mutations at the her-1 locus (n695 and ylO1) result in the opposite phenotype: XX animals are variably transformed (masculinized) into pseudomales (Trent et al. 1983(Trent et al. , 1988(Trent et al. , 1991).This dominant phenotype shows that her-1 expression in XX animals is suffici...