The gene is named foxl3, and has been identified in a small fish called medaka (Oryzias latipes).
Dr Toshiya Nishimura, Associate Professor Minoru Tanaka from the National Institute for Basic Biology, National Institutes of Natural Sciences in Japan and colleagues found that the foxl3 gene works in the germ cells of females "to suppress differentiation into sperm."
In females lacking functional foxl3 genes, the small fish's body appearance is still totally female, however a large number of sperm are formed in the ovaries, and a small number of eggs are formed at the same time.
"That this sexual switch present in the germ cells is independent of the body's sex is an entirely new finding," Nishimura said.
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"While germ cells can become either sperm or eggs, nobody knew that in vertebrates the germ cells have a switch mechanism to decide their own sperm or egg fate," Tanaka said.
"Our result indicates that once the decision is made the germ cells have the ability to go all the way to the end. I believe it is of very large significance that this mechanism has been found," Tanaka said.