Sex determination and differentiation is generalized with chromosomal sex during fertilization. At early stages, phenotypic sex does not match chromosomal sex—until later during intrauterine development, sexual maturation is reached. During intrauterine development, females change to male with the testes moving down from a blind vaginal pouch with a developing scrotum, as well as a penis which initially resembled a clitoris. What seems like a female phenotype is altered by increased testosterone levels secretion.

Mutations affecting the androgen receptor (AR) gene may cause either complete or partial androgen insensitivity syndrome. Androgen, a hormone used to describe a group of sex steroid hormones, is responsible for affecting male pseudohermaphroditism. The differentiation of the fetus as male takes place during the sixth or seventh week of gestation. The development is directed by the testicular determining factor: the gene SRY (sex determining region on Y chromosome). Throughout 9th to 13th week, the development of a male genitalia is dependent upon the conversion of testosterone to the more potent androgen by the action of 5α-reductase within the target tissues of the genitalia. A type of internal male pseudohermaphroditism is Persistent Müllerian duct syndrome, which is developed through synthesis of Müllerian-inhibiting factor defects. In such instances, duct derivatives are now in 46XY males—this includes the uterus, fallopian tubes, and upper vagina. These individuals with a hernia sac and bowel loops were found with duct derivatives as well as testes.

A study on a male pseudohermaphrodite kitten showed there was a combination of gastrointestinal and urogenital congenital abnormalities. It was confirmed to have type II atresia ani and rectovaginal fistula that is associated with male pseudohermaphroditism.

The common pathway of sexual differentiation, where a productive human female has an XX chromosome pair, and a productive male has an XY pair, is relevant to the development of intersex conditions.

During fertilization, the sperm adds either an X (female) or a Y (male) chromosome to the X in the ovum. This determines the genetic sex of the embryo. During the first weeks of development, genetic male and female fetuses are "anatomically indistinguishable", with primitive gonads beginning to develop during approximately the sixth week of gestation. The gonads, in a "bipotential state", may develop into either testes (the male gonads) or ovaries (the female gonads), depending on the consequent events. Through the seventh week, genetically female and genetically male fetuses appear identical.

At around eight weeks of gestation, the gonads of an XY embryo differentiate into functional testes, secreting testosterone. Ovarian differentiation, for XX embryos, does not occur until approximately Week 12 of gestation. In normal female differentiation, the Müllerian duct system develops into the uterus, Fallopian tubes, and inner third of the vagina.

In males, the Müllerian duct-inhibiting hormone MIH causes this duct system to regress. Next, androgens cause the development of the Wolffian duct system, which develops into the vas deferens, seminal vesicles, and ejaculatory ducts.

By birth, the typical fetus has been completely "sexed" male or female, meaning that the genetic sex (XY-male or XX-female) corresponds with the phenotypical sex; that is to say, genetic sex corresponds with internal and external gonads, and external appearance of the genitals.

Approximately 1 in 20,000 individuals with a male appearance have 46,XX testicular disorder.

The condition affects only those with a Y-chromosome because dihydrotestosterone (DHT) has no known role in development of XX fetuses.

Disorders of sex development (DSD), sometimes referred to as disorders of sex differentiation or differences of sex development, are medical conditions involving the reproductive system. More specifically, these terms refer to "congenital conditions in which development of chromosomal, gonadal, or anatomical sex is atypical."

The term has been controversial, and research has shown that affected people experience a negative impact, with the terminology impacting choice and utilization of health care providers. The World Health Organization and many medical journals still reference DSDs as intersex traits or conditions. The Council of Europe, and Inter-American Commission on Human Rights have called for a review of medical classifications that unnecessarily medicalize intersex traits.

5α-Reductase is an enzyme that converts testosterone to 5α-dihydrotestosterone (DHT) in peripheral tissues. These enzymes also participate in the creation of such neurosteroids as allopregnanolone and THDOC, convert progesterone into dihydroprogesterone (DHP), and convert deoxycorticosterone (DOC) into dihydrodeoxycorticosterone (DHDOC). 5-ARD is biochemically characterized by low to low-normal levels of testosterone and decreased levels of DHT, creating a higher testosterone/DHT ratio.

DHT is a potent androgen, and is necessary for the development of male external genitalia in utero.

In about 80 percent of individuals with 46,XX testicular disorder of sex development, the condition results from an abnormal exchange of genetic material between chromosomes (translocation). This exchange occurs as a random event during the formation of sperm cells in the affected person's father. The translocation causes the SRY gene to be misplaced, almost always onto an X chromosome. If a fetus is conceived from a sperm cell with an X chromosome bearing the SRY gene, it will develop as a male despite not having a Y chromosome. This form of the condition is called SRY-positive 46,XX testicular disorder of sex development.

About 20 percent of those with 46 XX testicular disorder of sex development do not have the SRY gene. This form of the condition is called SRY-negative 46,XX testicular disorder of sex development. The cause of the disorder in these individuals is often unknown, although changes affecting other genes have been identified. Individuals with SRY-negative 46,XX testicular disorder of sex development are more likely to have ambiguous genitalia than are people with the SRY-positive form.

Gonadectomy at time of diagnosis is the current recommendation for PAIS if presenting with cryptorchidism, due to the high (50%) risk of germ cell malignancy. The risk of malignancy when testes are located intrascrotally is unknown; the current recommendation is to biopsy the testes at puberty, allowing investigation of at least 30 seminiferous tubules, with diagnosis preferably based on OCT3/4 immunohistochemistry, followed by regular examinations. Hormone replacement therapy is required after gonadectomy, and should be modulated over time to replicate the hormone levels naturally present in the body during the various stages of puberty. Artificially induced puberty results in the same, normal development of secondary sexual characteristics, growth spurt, and bone mineral accumulation. Women with PAIS may have a tendency towards bone mineralization deficiency, although this increase is thought to be less than is typically seen in CAIS, and is similarly managed.

DSDs are medical conditions involving the way the reproductive system develops from infancy (and before birth) through young adulthood. There are several types of DSDs and their effect on the external and internal reproductive organs varies greatly.

A frequently-used social and medical adjective for people with DSDs is "intersex". Parents with DSD children and clinicians involved in DSD treatment usually try to make clear distinctions between biological sex, social gender, and sexual orientation. This helps reduce confusion about the differences between being intersex, being transgender, and being gay/lesbian.

The most common DSD is congenital adrenal hyperplasia (CAH), which results in a person with female (XX) chromosomes having genitals that look somewhat masculine. In mild cases CAH results in a slightly enlarged clitoris, while in more severe cases it can be difficult to decide (just by looking) whether a baby is male or female (this is called having ambiguous genitals). Nevertheless, if they are old enough to know the difference, most children with CAH think of themselves as girls. CAH is caused by a problem with the adrenal glands and is usually treated by taking a daily medication to replace or supplement the missing adrenal hormones. (When this adrenal problem occurs in people with male (XY) chromosomes, the result is over-masculinization and premature puberty).

Another common DSD is androgen insensitivity syndrome (AIS), which means that a person with male (XY) chromosomes does not respond to testosterone in the usual way. This results in a body that to some degree has a feminine appearance. In Complete Androgen Insensitivity Syndrome (CAIS) the result is a totally feminine appearance, including typical female breast development. Consequently, most young women with CAIS are unaware of their condition until the early teen years when they fail to menstruate. In the milder form, called Partial Androgen Insensitivity Syndrome (PAIS), the genitals can vary from mostly female to almost completely male. Some people with PAIS think of themselves as girls/women, others regard themselves as boys/men, and some consider themselves mixed-gender.

One of the more unusual DSDs is 5-alpha-reductase deficiency (5ARD). It is caused by a shortage early in life of an enzyme that activates testosterone. In this condition, a person with male (XY) chromosomes has a body that appears female before puberty. After puberty begins, other testosterone-activating enzymes become available and the body soon takes on a masculine appearance, with the scrotum and penis usually reaching typical or nearly-typical size. If 5ARD is diagnosed at a young age, the child is often raised as a boy (a 1996 Brazilian study suggested that the majority of adults with this condition consider themselves men but this has been questioned in some more recent research).

In addition to CAH, CAIS, PAIS, and 5ARD there are several rarer types of DSDs, and in some cases it is not possible to make a clear diagnosis of the underlying condition.

The penis and clitoris are essentially the same organ (differing only in size, and generically called the phallus). In typical males, the urethra is located at the tip of the penis, while in typical females the urethra is located below the base of the clitoris. When the phallus is of intermediate size, it is possible also to have a urethral opening located along the shaft; this condition is known as hypospadias.

Open-minded parenting, appropriate and conservative medical intervention, and age-appropriate child involvement in the treatment plan contribute greatly to successful outcomes for the entire range of DSDs.

Surgery is sometimes performed to alter the appearance of the genitals. However many surgeries performed on intersex people lack clear evidence of necessity, can be considered as mutilating, and are widely considered to be human rights violations when performed without the informed consent of the recipient.

Individuals with CAIS are raised as females. They are born phenotypically female and almost always have a heterosexual female gender identity; the incidence of homosexuality in women with CAIS is thought to be less than unaffected women. However, at least two case studies have reported male gender identity in individuals with CAIS.

According to the UN Office of the High Commissioner for Human Rights:

In biological terms, sex may be determined by a number of factors present at birth, including:

- the number and type of sex chromosomes;

- the type of gonads—ovaries or testicles;

- the sex hormones;

- the internal reproductive anatomy (such as the uterus in females); and

- the external genitalia.

People whose characteristics are not either all typically male or all typically female at birth are intersex.

Some intersex traits are not always visible at birth; some babies may be born with ambiguous genitals, while others may have ambiguous internal organs (testes and ovaries). Others will not become aware that they are intersex unless they receive genetic testing, because it does not manifest in their phenotype.

Depending on phenotypic features, impotence and other sexual problems such as anejaculation or sexual aversion may be fairly common among individuals with PAIS, but do not necessarily indicate low libido. Support groups for individuals with PAIS may help affected individuals discuss their concerns more comfortably. Some individuals with PAIS may try to avoid intimate relationships out of fear of rejection; individual therapy may help some to overcome social anxiety, and restore focus to interpersonal relationships instead of solely on sexual function and activity.

Challenges presented to people affected by this condition include: psychologically coming to terms with the condition, difficulties with sexual function, infertility. Long-term studies indicate that with appropriate medical and psychological treatment, women with CAIS can be satisfied with their sexual function and psychosexual development. CAIS women can lead active lives and expect a normal lifespan.

The 2006 Consensus statement on the management of intersex disorders states that individuals with 17β-hydroxysteroid dehydrogenase III deficiency have an intermediate risk of germ cell malignancy, at 28%, recommending that gonads be monitored. A 2010 review put the risk of germ cell tumors at 17%.

The management of 17β-hydroxysteroid dehydrogenase III deficiency can consist, according to one source, of the elimination of gonads prior to puberty, in turn halting masculinization.

Hewitt and Warne state that, children with 17β-hydroxysteroid dehydrogenase III deficiency who are raised as girls often later identify as male, describing a "well known, spontaneous change of gender identity from female to male" that "occurs after the onset of puberty." A 2005 systematic review of gender role change identified the rate of gender role change as occurring in 39–64% of individuals with 17β-hydroxysteroid dehydrogenase III deficiency raised as girls.

Estimates for the incidence of androgen insensitivity syndrome are based on a relatively small population size, thus are known to be imprecise. CAIS is estimated to occur in one of every 20,400 46,XY births. A nationwide survey in the Netherlands based on patients with genetic confirmation of the diagnosis estimates that the minimal incidence of CAIS is one in 99,000. The incidence of PAIS is estimated to be one in 130,000. Due to its subtle presentation, MAIS is not typically investigated except in the case of male infertility, thus its true prevalence is unknown.

Encountered karyotypes include 47XXY, 46XX/46XY, or 46XX/47XXY or XX & XY with SRY Mutations, Mixed Chromosomal abnormalities or hormone deficiency/excess disorders, and various degrees of mosaicism of these and a variety of others. The 3 Primary Karyotypes for True Hermaphroditism are XX with genetic defects (55-70% of cases), XX/XY (20-30% of cases) & XY (5-15% of cases) with the remainder being a variety of other Chromosomal abnormalities and Mosaicisms.

During embryogenesis, without any external influences for or against, the human reproductive system is intrinsically conditioned to give rise to a female reproductive organisation.

As a result, if a gonad cannot express its sexual identity via its hormones—as in gonadal dysgenesis—then the affected person, no matter whether their chromosomes are XY or XX, will develop external female genitalia. Internal female genitalia, primarily the uterus, may or may not be present depending on the cause of the disorder.

In both sexes, the commencement and progression of puberty require functional gonads that will work in harmony with the hypothalamic and pituitary glands to produce adequate hormones.

For this reason, in gonadal dysgenesis the accompanying hormonal failure also prevents the development of secondary sex characteristics in either sex, resulting in a sexually infantile female appearance and infertility.

In an embryo, the conversion of the gonads into testicles in males-to-be and into ovaries in females-to-be is the function of Leydig cells. In testicular agenesis, this process fails. Penile agenesis can be caused by testicular agenesis. Testes are the sole producer of 5-alpha dihydrotestosterone (5aDHT) in the male body. Where the gonads fail to metamorphose into testes, there is no 5aDHT. Therefore, the masculising process that builds the genital tubercle, the precursor to the penis, is stillborn. When this happens, the child is born with both penile and testicular agenesis and is known by the slang term "nullo". This combination of both conditions is estimated to occur in between 20-30 million male births.

Penile agenesis can exist independently after full testicular development; in this case its cause is unknown.

A problem for people with penile agenesis is the absence of a urinary outlet. Before genital metamorphosis, the urethra runs down the anal wall, to be pulled away by the genital tubercle during male development. Without male development this does not occur. The urethra can be surgically redirected to the rim of the anus immediately after birth to enable urination and avoid consequent internal irritation from urea concentrate. In such cases, the perineum may be left devoid of any genitalia, male or female.

A working penis transplant on to an agenetic patient has never been successful. Only one major penis graft was successfully completed. This occurred in China and the patient shortly rejected it on psychological grounds. However a full female or agenetic to male transplant is not yet facilitated to fulfil full reproductive functions.

On March 18, 2013, it was announced that Andrew Wardle, a British man born without a penis, was going to receive a pioneering surgery to create a penis for him. The surgeons hope to "fold a large flap of skin from his arm — complete with its blood vessels and nerves — into a tube to graft onto his pubic area." If the surgery goes well, the odds of starting a family are very good.

Depending on the mutation, a person with a 46,XY karyotype and AIS can have either a male (MAIS) or female (CAIS) phenotype, or may have genitalia that are only partially masculinized (PAIS). The gonads are testes regardless of phenotype due to the influence of the Y chromosome. A 46,XY female, thus, does not have ovaries or a uterus, and can neither contribute an egg towards conception nor gestate a child.

Several case studies of fertile 46,XY males with AIS have been published, although this group is thought to be a minority. Additionally, some infertile males with MAIS have been able to conceive children after increasing their sperm count through the use of supplementary testosterone. A genetic male conceived by a man with AIS would not receive his father's X chromosome, thus would neither inherit nor carry the gene for the syndrome. A genetic female conceived in such a way would receive her father's X chromosome, thus would become a carrier.

There are no documented cases in which both types of gonadal tissue function.

Although fertility is possible in true hermaphrodites, there has yet to be a documented case where both gonadal tissues function, contrary to the misconception that hermaphrodites can impregnate themselves. As of 2010, there have been at least 11 reported cases of fertility in true hermaphrodite humans in the scientific literature, with one case of a person with XY-predominant (96%) mosaic giving birth.

Nuclear receptor subfamily 5 group A member 1 (NR5A1), also known as SF1 or Ad4BP (MIM 184757), is located on the long arm of chromosome 9 (9q33.3). The NR5A1 is an orphan nuclear receptor that was first identified following the search for a common regulator of the cytochrome P450 steroid hydroxylase enzyme family. This receptor is a pivotal transcriptional regulator of an array of genes involved in reproduction, steroidogenesis and male sexual differentiation and also plays a crucial role in adrenal gland formation in both sexes. NR5A1 regulates the mullerian inhibitory substance by binding to a conserved upstream regulatory element and directly participates in the process of mammalian sex determination through mullerian duct regression. Targeted disruption of NR5A1 (Ftzf1) in mice results in gonadal and adrenal agenesis, persistence of Mullerian structures and abnormalities of the hypothalamus and pituitary gonadotropes. Heterozygous animals demonstrate a milder phenotype including an impaired adrenal stress response and reduced testicular size. In humans, NR5A1 mutations were first described in patients with 46, XY karyotype and disorders of sex development (DSD), Mullerian structures and primary adrenal failure (MIM 612965). After that, heterozygous NR5A1 mutations were described in seven patients showing 46, XY karyotype and ambiguous genitalia, gonadal dysgenesis, but no adrenal insufficiency. Since then, studies have confirmed that mutations in NR5A1 in patients with 46, XY karyotype cause severe underandrogenisation, but no adrenal insufficiency, establishing dynamic and dosage-dependent actions for NR5A1. Subsequent studies revealed that NR5A1 heterozygous mutations cause primary ovarian insufficiency (MIM 612964).

The degree to which individuals with XX male syndrome develop the male phenotype is variable, even among SRY-positive individuals. A completely male phenotype usually develops in the presence of the SRY gene but, in some cases, the presence of the SRY gene can result in internal and/or external genitalia ambiguities. Normal XX females undergo X inactivation during which one copy of the X chromosome is silenced. It is thought that X inactivation in XX males may account for the genital ambiguities and incomplete masculinization seen in SRY-positive XX males. The X chromosome with the SRY gene is preferentially chosen to be the active X chromosome 90% of the time, which is why a complete male phenotype is often seen in SRY-positive XX males. In the remaining 10%, X inactivation spreads to include a portion of the SRY gene, resulting in incomplete masculinization.

Masculinization of SRY-negative XX males is dependent upon which genes have mutations and at what point in development these mutations occur.

Economic uses of sterility include:

- the production of certain kinds of seedless fruit, such as seedless tomato or watermelon (though sterility is not the only available route to fruit seedlessness);

- terminator technology, methods for restricting the use of genetically modified plants by causing second generation seeds to be sterile;

- biological control; for example, trap-neuter-return programs for cats; and the sterile insect technique, in which large numbers of sterile insects are released, which compete with fertile insects for food and mates, thus reducing the population size of subsequent generations, which can be used to fight diseases spread by insect vectors such as malaria in mosquitoes.