In mammals, the sex determination system has already been unraveled in cons
iderable detail, and the genes involved are increasingly used to investigat
e this system in non-mammalian vertebrates. Data available so far indicate
that many of the genes identified are involved in this pathway throughout t
he vertebrate phylum, suggesting that the mechanism of sex determination wa
s essentially conserved in this taxonomic category. However, a rather funda
mental difference between mammals and non-mammalian vertebrates is the role
of steroid sex hormones which are critical for gonadal differentiation in
the latter, while during mammalian evolution an innovation occurred, whereb
y genes that superseded steroids as factors acting in early gonadogenesis w
ere co-opted to the pathway. An intermediate stage of this evolutionary swi
tch may still be represented by extant marsupials. Referring to the central
role of aromatase in steroid-mediated, and of SRY in eutherian gonadal det
ermination/differentiation, it is argued here that the "aromatase system" w
as replaced by the "SRY system" as a prerequisite for the evolution of plac
entation. It is proposed that in co-evolution with placentation, new specif
icities and extensions of the pleiotropic spectrum of sex-determining genes
have appeared. The evolutionary innovation of placentation may thus have b
een materialized by reorganization of the sex-determining system whereby ge
nes were recruited at the top of the pathway and genes at the bottom remain
ed rather conservative but became increasingly pleiotropic.