The enzyme aromatase controls the androgen/oestrogen ratio by catalysing the irreversible conversion of testosterone into oestradiol (E2). Therefore, the regulation of E2 synthesis by aromatase is thought to be critical in sexual development and differentiation. Here, we demonstrate for the first time that experimental manipulation of E2 levels via the aromatase pathway induces adult sex change in each direction in a hermaphroditic fish that naturally exhibits bidirectional sex change. Our results demonstrate that a single enzymatic pathway can regulate both female and male sexual differentiation, and that aromatase may be the key enzyme that transduces environmental, including social, cues to functional sex differentiation in species with environmental sex determination.