SummaryIn vertebrate sexual development, two important steroid hormones – testosterone and estrogen – regulate the sex-specific development of many tissues. In contrast, invertebrates utilize a single steroid hormone, ecdysone, to regulate developmental timing in both sexes. Here, we show that in the fruit flyDrosophila melanogaster, sex-specific ecdysone activity controls important aspects of gonad sexual dimorphism. Rather than being regulated at the level of hormone production, hormone activity is regulated cell-autonomously through sex-specific hormone reception. We found thatEcdysone receptor (EcR)is regulated down-stream of the sex determination factor Doublesex (Dsx), the founding member of the Dsx/Mab3 Related Transcription Factor (DMRT) family that regulates gonad development in all animals. EcR is restricted to the developing ovary and repressed in the testis at a time when ecdysone initiates ovary morphogenesis. EcR activity drives ovary development and antagonizes development of the testis stem cell niche. Interestingly, de-repression of the ecdysone response in the testis led to rapid feminization, which is known to cause infertility. This work demonstrates that invertebrates can also use steroid hormone signaling to control sex-specific development. Further, it may help explain recent work showing that vertebrate sexual development is surprisingly cell-autonomous. For example, in birds that have a mixture of cells with male and female genotypes, the male cells develop as male and the female cells develop as female despite exposure to the same circulating hormones. Sex-specific regulation of steroid hormone response in vertebrates may well underly such cellular sexual fate choices.