The vertebrate ovary and testis develop from a sexually indifferent gonad. During early development of the organism, primordial germ cells (the gamete lineage) and somatic gonad cells coalesce and begin to undergo growth and morphogenesis to form this bipotential gonad. Although this aspect of development is requisite for a fertile adult, little is known about the genetic regulation of early gonadogenesis in any vertebrate. Here, we provide evidence that fibroblast growth factor (Fgf) signaling is required for the early growth phase of a vertebrate bipotential gonad. Based on mutational analysis in zebrafish, we show that the Fgf ligand 24 (Fgf24) is required for proliferation, differentiation, and morphogenesis of the early somatic gonad, and as a result, most fgf24 mutants are sterile as adults. Additionally, we describe the ultrastructural elements of the early zebrafish gonad and show that distinct somatic cell populations can be identified soon after the gonad forms. Specifically, we show that fgf24 is expressed in an epithelial population of early somatic gonad cells that surrounds an inner population of mesenchymal somatic gonad cells that are in direct contact with the germ cells, and that fgf24 is required for stratification of the somatic tissue. Furthermore, based on gene expression analysis, we find that differentiation of the inner mesenchymal somatic gonad cells into functional cell types in the larval and early juvenile-stage gonad is dependent on Fgf24 signaling. Finally, we argue that the role of Fgf24 in zebrafish is functionally analogous to the role of tetrapod FGF9 in early gonad development.