In mammals, the gonad is composed of germ cells and somatic cells. The gonads have the potential of bidirectional differentiation before sex determination. The differentiation of somatic cells in the gonad determines the development of testis or ovary, and this process is regulated by many factors. SRY, SOX9, SOX3, SOX8, SOX10, FGF9/FGFR2, PGD2, AMH, and DMRT1 are involved in the differentiation of testis. By contrast, FOXL2, CTNNB1, RSPO1, WNT4, Follistatin, ERα/β, and BMP2 play important roles in ovary development. If these molecular regulatory networks are damaged by endogenous or exogenous factors, disorders of sex differentiation, even sex reversal, will occur. In this review, the regulation of somatic cell fate during gonad primordium formation and sex determination in mouse model was discussed.