In this study, all genetic female (XX) broods of Japanese flounder were produced artificially by mating the females with sex-reversed males. The proliferation and migration of primordial germ cells (PGCs), formation of ovary and oogenesis were described in detail. After hatching, around 20 individual PGCs migrated from the lateral to the dorsal of trunk region. At 15 days posthatching (dph), a part of PGCs were covered by a single layer somatic cells and formed the genital ridge. By 22 dph, the elongated gonadal primordia appeared under the ventral kidney, where the PGCs were totally enclosed by somatic cells. During the process of migration, PGCs were presumed to be mitotically inactive. From 63 to 73 dph, somatic cells rearrangement resulted in the formation of a narrow crevice, which became deeper and formed ovarian lumen. However, at 52 dph, dramatic mitotic proliferation of germ cell occurred and germline nest formed before the appearance of ovarian lumen. The onset of intensive germ cell proliferation and appearance of cell nests could be accepted as a criterion of initial ovarian differentiation. Then germ cells and somatic epithelial cells were gradually delimited by basement membrane and formed the germinal epithelium. In this period, results from in situ hybridization revealed that the early forkhead box L2 (pofoxl2) was expressed in somatic cells and oocytes in primary growth, which indicated the prefollicle cells formed. Then oogonia or oocytes, follicle cells, basement membrane, and theca cells composed a follicle complex. Finally, oocytes underwent meiosis and developed into to mature eggs. Anat Rec, 301:727-741, 2018. © 2017 Wiley Periodicals, Inc.