To help understand the elusive mechanisms of zebrafish sex determination, we studied the genetic machinery regulating production and breakdown of retinoic acid (RA) during the onset of meiosis in gonadogenesis. Results uncovered unexpected mechanistic differences between zebrafish and mammals. Conserved synteny and expression analyses revealed that cyp26a1 in zebrafish and its paralog Cyp26b1 in tetrapods independently became the primary genes encoding enzymes available for gonadal RA-degradation, showing lineage-specific subfunctionalization of vertebrate genome duplication (VGD) paralogs. Experiments showed that zebrafish express aldh1a2, which encodes an RA-synthesizing enzyme, in the gonad rather than in the mesonephros as in mouse. Germ cells in bipotential gonads of all zebrafish analyzed were labeled by the early meiotic marker sycp3, suggesting that in zebrafish, the onset of meiosis is not sexually dimorphic as it is in mouse and is independent of Stra8, which is required in mouse but was lost in teleosts. Analysis of dead-end knockdown zebrafish depleted of germ cells revealed the germ cell-independent onset and maintenance of gonadal aldh1a2 and cyp26a1 expression. After meiosis initiated, somatic cell expression of cyp26a1 became sexually dimorphic: up-regulated in testes but not ovaries. Meiotic germ cells expressing the synaptonemal complex gene sycp3 occupied islands of somatic cells that lacked cyp26a1 expression, as predicted by the hypothesis that Cyp26a1 acts as a meiosis-inhibiting factor. Consistent with this hypothesis, females up-regulated cyp26a1 in oocytes that entered prophase-I meiotic arrest, and down-regulated cyp26a1 in oocytes resuming meiosis. Co-expression of cyp26a1 and the pluripotent germ cell stem cell marker pou5f1(oct4) in meiotically arrested oocytes was consistent with roles in mouse to promote germ cell survival and to prevent apoptosis, mechanisms that are central for tipping the sexual fate of gonads towards the female pathway in zebrafish.