Wilms tumor protein 1 (WT1) has been implicated in the control of several genes in sexual development, but its function in gonad formation is still unclear. Here, we report that WT1 stimulates expression of , the gene encoding VEGF receptor 2, in murine embryonic gonads. We found that WT1 and KDR are co-expressed in Sertoli cells of the testes and somatic cells of embryonic ovaries. Vivo-morpholino-mediated WT1 knockdown decreased transcripts in cultured embryonic gonads at multiple developmental stages. Furthermore, WT1 bound to the promoter in the chromatin of embryonic testes and ovaries. Forced expression of the WT1(-KTS) isoform, which functions as a transcription factor, increased mRNA levels, whereas the WT1(+KTS) isoform, which acts presumably on the post-transcriptional level, did not. ChIP indicated that WT1(-KTS), but not WT1(+KTS), binds to the promoter. Treatment with the KDR tyrosine kinase inhibitor SU1498 or the KDR ligand VEGFA revealed that KDR signaling represses the testis-promoting gene in embryonic XX gonads. WT1 knockdown abrogated the stimulatory effect of SU1498-mediated KDR inhibition on expression. Exposure to 1% O to mimic the low-oxygen conditions in the embryo increased expression but did not affect mRNA levels in gonadal explants. However, incubation in 1% O in the presence of SU1498 significantly reduced transcripts in cultured testes and increased levels in ovaries. These findings demonstrate that both the local oxygen environment and WT1, which enhances expression, contribute to sex-specific expression in developing murine gonads.