The importance of steroidogenic factor-1 (SF-1) gene dosage in endocrine function is evidenced by phenotypes associated with the heterozygous state in mice and humans. Here we examined mechanisms underlying SF-1 haploinsufficiency and found a striking reduction (12-fold) in SF-1 heterozygous (+/-) adrenocortical size at embryonic day (E) 12. Loss of one SF-1 allele led to a selective decrease in adrenal precursors within the adrenogonadal primordium at E10.0, without affecting the number of gonadal precursors, as marked by GATA-4. Beginning at E13.5, increased cell proliferation in SF-1 +/- adrenals allows these organs to approach but not attain a normal size. Remarkably, neural crest-derived adrenomedullary precursors migrated normally in SF-1 +/- and null embryos. However, later in development, medullary growth was compromised in both genotypes. Despite the small adrenal size in SF-1heterozygotes, an unexpected elevation in steroidogenic capacity per cell was observed in primary adult adrenocortical SF-1 +/- cells compared with wild-type cells. Elevated cellular steroid output is consistent with the up-regulation of some SF-1 target genes in SF-1 +/- adrenals and may partially be due to an observed increase in nerve growth factor-induced-B. Our findings underscore the need for full SF-1 gene dosage early in adrenal development, but not in the adult adrenal, where compensatory mechanisms restore near normal function.