The elegant embryological experiments of Jost demonstrated the existence of a foetal testicular factor that is required to cause the regression of the müllerian duct system, the anlagen of the uterus, oviducts and upper portion of the vagina, during male sexual development. The müllerian inhibitor currently known as müllerian-inhibiting substance (MIS) or anti-müllerian hormone (AMH), is a member of the transforming growth factor-beta (TGF-beta) family of growth and differentiation factors. The genetic manipulation of the mouse germline has lead to the generation of animal models for MIS function. Female transgenic mice that chronically express MIS during embryogenesis are born without a uterus or oviducts and their ovaries lose germ cells and degenerate, recapitulating the phenotype of the bovine freemartin. Some male transgenic mice from very high MIS-expressing lines are feminized, suggesting alterations in androgen biosynthesis. Male mice homozygous for a targeted mutation of the MIS gene develop as male pseudohermaphrodites with both male (testes and Wolffian duct-derived) and female (müllerian duct-derived) reproductive organs. Most are infertile because the development of two reproductive systems physically blocks the exit of sperm from these males. In addition, Leydig cell hyperplasia is detected in a proportion of these males and in one case a Leydig cell tumour was found. Recently, a gene encoding a TGF-beta family type II Ser/Thr kinase membrane-bound receptor has been isolated that is expressed in both male and female gonads and in the mesenchyme surrounding the müllerian ducts during embryogenesis. These findings suggest that MIS-mediated müllerian duct regression occurs indirectly through mesenchymal tissue. A targeted mutation of this receptor has been established in the mouse germline. Mice homozygous for this receptor mutation should be useful in understanding the MIS signalling pathway for müllerian duct regression and gonadal function.