Two aspects of testosterone formation by the fetal testes have been investigated in rabbit embryos and newborn that varied in age from 17 days of gestation to 3 days after birth. In the first series of studies the placental content of pregnenolone and progesterone was measured by a double isotope derivative technique. At each time studied the concentration of pregnenolone (mean 12.0 ng/g) exceeded that of progesterone (mean 2.5 ng/g). This finding indicates that C21 steroids of placental origin are available to serve as potential precursors for testosterone biosynthesis by the fetal testis prior to the commencement of this function. In the second series of studies the conversion of pregnenolone-7α-3H to testosterone by the fetal gonad was investigated, utilizing thin—layer and Celite column chromatography for the separation of the incubation products. The capacity for testosterone formation from this precursor was shown to rise from immeasurably low levels at day 17 to a maximal rate of 344 pmoles/10 mg tissue/hr by day 23, a sequence that parallels almost exactly the androgen—mediated events in male sexual differentiation in this species. As the result of studies in which radioactive products were isolated following the incubation of fetal gonads with pregnenolone– 7α-3H, progesterone–l,2-3H, or with a combination of androstenedione–l,2-3H and dehydroepiandrosterone– 4-14C, evidence has been obtained that the commencement of testosterone synthesis between day 17 and day 19 is the result of the acquisition of the 3β–hydroxysteroid dehydrogenase–Δ5-isomerase complex.(Endocrinology92: 1182, 1973)