Sex determination in mammals depends on the differentiation of the supporting lineage of the gonads into Sertoli or pregranulosa cells that govern testis and ovary development, respectively. Although the Y-linked testis-determining gene Sry has been identified, the ovarian-determining factor remains unknown. In this study, we identified −KTS, a major, alternatively spliced isoform of the Wilms tumor suppressor WT1, as a key determinant of female sex determination. Loss of − KTS variants blocked gonadal differentiation in mice, whereas increased expression, as found in Frasier syndrome, induced precocious differentiation of ovaries independently of their genetic sex. In XY embryos, this antagonized Sry expression, resulting in male-to-female sex reversal. Our results identify −KTS as an ovarian-determining factor and demonstrate that its time of activation is critical in gonadal sex differentiation.