Gonadal sex in most mammals is determined based on sex differentiation of the supporting cell lineages. In mouse XY gonads, SRY induces SOX9 upregulation and subsequent FGF9 expression by embryonic day 11.5 (E11.5), leading to the differentiation of Sertoli cells. XX gonads, lacking SRY action, start on the ovarian program through the actions of WNT4 and FOXL2 from around E11.5-12.0. These 2 ovarian factors, together with retinoic acid (RA) action, promote feminization partially through the repression of the masculinizing activities of SOX9, FGF9 and DMRT1. RA initiates meiosis in female germ cell cysts, in which intercellular bridges between interconnected germ cells rapidly undergo cyst breakdown by E17.5. Ovarian morphogenesis is characterized by continuous recruitment of pre-granulosa progenitor cells from the coelomic epithelia during the embryonic stage, which results in the formation of ovigerous cords and tight packing of non-interconnected oocytes (i.e. oocyte nests) at the perinatal stages. At birth, the oocyte nests break down into single oocytes surrounded by granulosa cells, leading to the assembly of primordial follicles. This review focuses on recent advances in the molecular and cellular events of initial ovarian differentiation, meiotic initiation, germ cell nest breakdown, and primordial follicle formation based on anatomical and morphogenetic aspects.