To investigate the role of gonadal hormones during the postnatal period on the development of masculine and feminine behavior 129 male and female rats were hormonally manipulated at birth. Within 24 hours of birth male and female rats were: (a) sham operated, (b) gonadectomized, (c) gonadectomized and given testosterone, or (d) gonadectomized and given estrogen. When adult all animals were given testosterone and tested for the display of male behavior, and then given estrogen and progesterone and tested for female behavior. Male behavior: Males exhibited mounting responses more frequently than females regardless of hormone manipulation at birth. Androgen and estrogen at birth did not facilitate mounting behavior in either sex. Males exhibited more frequent intromission responses than females. Animals treated with androgen at birth showed more frequent intromission behavior than non-treated animals. Androgen facilitated intromission relatively more in males than in females. Estrogen at birth did not facilitate intromission behavior. Female behavior: Males castrated at birth, normal females, and females ovariectomized at birth showed high levels of receptivity. No other animal exhibited frequent lordosis. The data indicated that behavioral sexual differentiation induced by hormones in in-fancy is best characterized by an inhibition of the potential to display feminine behavior.