Wild type embryos of the newt Pleurodeles waltl were used to realize parabiosis, a useful model to study the effect of endogenous circulating hormones on gonad development. The genotypic sex of each parabiont (ZZ male or ZW female) was determined early from the analysis of the sex chromosome borne marker peptidase-1. In ZZ/ZZ and ZW/ZW associations, gonads develop according to genetic sex. In ZZ/ZW associations, the ZZ gonads differentiate as normal testes while ZW gonads development shows numerous alterations. At the beginning of sex differentiation, these ZW gonads possess a reduced number of germ cells and a reduced expression of steroidogenic factor 1 and P450-aromatase mRNAs when compared to gonads from ZW/ZW associations. During gonad differentiation, conversely to the control situation, these germ cells do not enter meiosis as corroborated by chromatin status and absence of the meiosis entry marker DMC1; the activity of the estradiol-producing enzyme P450-aromatase is as low as in ZZ gonads. At adulthood, no germ cells are observed on histological sections, consistently with the absence of VASA expression. At this stage, the testis-specific marker DMRT1 is expressed only in ZZ gonads, suggesting that the somatic compartment of the ZW gonad is not masculinized. So, when exposed to ZZ hormones, ZW gonads reach the undifferentiated status but the ovary differentiation does not occur. This gonad is inhibited by a process affecting both somatic and germ cells. Additionally, the ZW gonad inhibition does not occur in the case of an exogenous estradiol treatment of larvae. Mol. Reprod. Dev. 75: 439–449, 2008. © 2007 Wiley-Liss, Inc.