Sex determination is the process by which the bipotential gonads develop as either testes or ovaries. With two distinct potential outcomes, the gonadal primordium offers a unique model for the study of cell fate specification and how distinct cell populations diverge from multipotent progenitors. This review focuses on recent advances in our understanding of the genetic programs and epigenetic mechanisms that regulate gonadal sex determination and the regulation of cell fate commitment in the bipotential gonads. We rely primarily on mouse data to illuminate the complex and dynamic genetic programs controlling cell fate decision and sex-specific cell differentiation during gonadal formation and gonadal sex determination.