The zebrafish ftz-f1 gene, ff1b, is activated in two cell clusters lateral to the midline in the trunk during late embryogenesis. These cell clusters coalesce to form a discrete organ at around 30 hpf, which then begins to acquire a steroidogenic identity as evidenced by the expression of the steroidogenic enzyme genes, cyp11a and 3beta-hsd. The migration of the cell clusters to the midline is impaired in zebrafish midline signaling mutants. Knockdown of Ff1b activity by antisense ff1b morpholino oligonucleotide (ff1bMO) leads to phenotypes that are consistent with impaired osmoregulation. Injection of ff1bMO was also shown to downregulate the expression of cyp11a and 3beta-hsd. Histological comparison of wild-type and ff1b morphants at various embryonic and juvenile stages revealed the absence of interrenal tissue development in ff1b morphants. The morphological defects of ff1b morphants could be mimicked by treatment with aminoglutethimide, an inhibitor of de novo steroid synthesis. Based on these data, we propose that ff1b is required for the development of the steroidogenic tissue of the interrenal organ.