Using primary cultures of oligodendrocyte progenitors isolated from male and female neonatal rodent brains, we observed more oligodendrocytes in female-derived compared to male-derived cultures. To determine whether the observed differences were due to a differential effect of sex hormones on proliferation, we treated cultures with increasing doses of 17β-estradiol, testosterone or progesterone and labeled cells with bromodeoxyuridine to identify cells in S phase. Treatment with 17β-estradiol, but not progesterone or testosterone, delayed the exit of oligodendrocyte progenitor cells from the cell cycle. In addition, 17β-estradiol treatment enhanced membrane sheet formation, while progesterone increased cellular branching. Interestingly, the estrogen modulator tamoxifen mimicked the effect of 17β-estradiol on cell cycle exit, but not on membrane formation. Immunocytochemical localization of estrogen receptors (ERs) showed ERβ mainly localized to the cytoplasm of oligodendrocytes, suggesting that the effect of 17β-estradiol on membrane formation could be mediated by interaction with this receptor. We conclude that sex steroids differentially regulate oligodendrocyte progenitor number and myelin formation, possibly contributing to gender-specific differences in repair.