The classic view of sexual differentiation is that the male brain develops under the influence of testicular secretions, whereas the female brain develops in the absence of any hormonal stimulation. However, several studies have suggested a possible role of estradiol in female neural development, although they did not provide unequivocal evidence that estradiol is indispensable for the development of the female brain and behavior. As a result, the hypothesis subsequently languished because of the lack of a suitable animal model to test estrogen's possible contribution to female differentiation. The recent introduction of the aromatase knockout (ArKO) mouse, which is deficient in aromatase activity because of a targeted mutation in the CYP19 gene and therefore cannot aromatize androgen to estrogen, has provided a new opportunity to reopen the debate of whether estradiol contributes to the development of the female brain. Female ArKO mice showed reduced levels of lordosis behavior after adult treatment with estradiol and progesterone, suggesting that estradiol is required for the development of the neural mechanisms controlling this behavior in female mice. The neural systems affected may include the olfactory systems in that ArKO females also showed impairments in olfactory investigation of odors from conspecifics. Thus, the classic view of sexual differentiation, that is, the female brain develops in the absence of any hormonal secretion, needs to be re-examined.