The normal histogenesis of the rat genital tubercle and the effect of exposure in utero to the 5 alpha-reductase inhibitor finasteride (L-652,931; MK-0906; Proscar) on that process were studied. In normal males and females, the genital tubercle was first seen on Day 14.25 of gestation. It contained a urethral plate which extended from the cloaca (and after Day 15.25, from the urogenital sinus) to the tip of the tubercle. On Day 18.25 the glans lamellae, which would separate the glans penis or the clitoris from the prepuce, began to develop in both sexes. Also on Day 18.25 a dense, midline plate of mesenchymal cells was first evident between the urogenital sinus and the rectum in normal males. This plate acted as a wedge, first increasing the separation between the rectum and the urogenital sinus, and subsequently separating the urethral plate from the surface epithelium in the genital tubercle. As a result, by Day 21.25 the urethra in males followed an "S"-shaped course, extending from the pelvis through the center of the glans penis to an orifice near the tip of the genital tubercle. In females, in which a mesenchymal plate did not develop, the urethral orifice remained at the base of the tubercle, and the clitoris contained the remnants of the urethral plate, extending as an open groove from the urethral orifice to the tip of the tubercle. Finasteride did not affect development of the genital tubercle in females. However, in males exposed to finasteride in utero, there was variable failure of the mesenchymal wedge to develop. As a result, the urethral plate remained in contact with the surface epithelium and eventually opened to form a groove on the ventral surface of the glans penis (hypospadias). Also, the persistence of the urethral plate along the ventral midline in finasteride-treated male fetuses and its subsequent opening as a groove interfered with development of the glans lamellae, causing displacement of the frenulum distally on the glans penis and the development of a cleft in the prepuce.