A major transition during development of the gonad is commitment from an undifferentiated "bi-potential" state to ovary or testis fate. In mammals, the oogonia of the developing ovary are known to be important for folliculogenesis. An additional role in promoting ovary fate or female sex determination has been suggested, however it remains unclear how the germ line might regulate this process. Here we show that the germ line is required for the ovary versus testis fate choice in zebrafish. When the germ line is absent, the gonad adopts testis fate. These germ line deficient testes have normal somatic structures indicating that the germ line influences fate determination of surrounding somatic tissues. In germ line deficient animals the expression of the ovary specific gene cyp19a1a fails to be maintained whereas the testis genes sox9a and amh remain expressed. Furthermore, we observed decreased levels of the ovary specific genes cyp19a1a and foxL2 in germ line deficient animals prior to morphological sex differentiation of the gonad. We propose that the germ line has a common role in female sex determination in fish and mammals. Additionally, we show that testis specification is sufficient for masculinization of the fish pointing to a direct role of hormone signaling from the gonad in directing sex differentiation of non-gonadal tissues.