Perinuclear theca (PT) is the cytoskeletal coat of mammalian sperm nucleus that is removed from the sperm head at fertilization. PT harbors the sperm borne, oocyte-activating factor (SOAF), a yet-to-be-characterized substance responsible for triggering the signaling cascade of oocyte activation, thought to be dependent on intra-oocyte calcium release. The present article reviews the current knowledge on the biogenesis and molecular composition of sperm PT. Possible functions of sperm PT during natural and assisted fertilization, and in the initiation of embryonic development are discussed. Furthermore, evidence is provided that SOAF is transferred from the sperm PT to oocyte cytoplasm through the internalization and rapid solubilization of the post-acrosomal PT. It is shown that during natural fertilization the sperm PT dissolves in the oocyte cytoplasm concomitantly with sperm nuclear decondensation and the initiation of pronuclear development. SOAF activity is preserved in the differentially extracted sperm heads only if the integrity of PT is maintained. After intracytoplasmic sperm injection (ICSI), activation occurs only in those oocytes in which the injected spermatozoon displays complete or partial dissolution of PT. In the latter case, the residual PT of the sub-acrosomal and/or post-acrosomal sperm region may persist on the apical surface of the sperm nucleus/male pronucleus and may cause a delay or arrest of zygotic development. We propose that the sperm PT harbors SOAF in the post-acrosomal sheath, as this is the first part of the sperm cytosol to enter the oocyte cytoplasm and its disassembly appears sufficient to initiate the early events of oocyte activation. Dissolution of the sub-acrosomal part of the PT, on the other hand, appears necessary to insure complete DNA decondensation in the internalized sperm nucleus and initiate DNA synthesis of both pronuclei. The release of the SOAF from the sperm head into oocyte cytoplasm at fertilization ultimately leads to the activation of oocyte mechanism including the completion of the meiotic cell cycle, pronuclear development and anti-polyspermy defense.