The decision of the embryonic gonad to differentiate as either a testis or an ovary is a critical step in vertebrate development. The molecular basis of this decision has been the focus of much study, particularly over the past decade. Here we contrast the knowledge of early gonadal development and the switch to testis differentiation with the lack of molecular understanding of ovarian development at early stages. We review current knowledge regarding mechanisms of ovarian morphogenesis and propose a model for the hierarchical control of development of the fetal ovary, incorporating the few genes already known to be important and several signals or factors that are hypothesised to exist in the early ovary.