Changes in gonadal structure and serum levels of sex steroids were investigated during natural sex inversion from female to male in reared populations of the protogynous Mediterranean red porgy, Pagrus pagrus. Four developmental phases were identified by histological observation: female, early transitional (ETr), late transitional (LTr), and male phases. At female phase, a few nests of spermatogonia were observed at the posterior-ventral part of the gonad mainly in females out of the breeding season. At ETr phase, spermatogonial proliferation occurred while perinucleolar oocytes showed signs of degeneration. At LTr phase, seminiferous lobules were formed and spermatogonial proliferation expanded along the ovary which degenerated. All types of male germ cells could be found. At male phase, functional testis underwent active spermatogenesis while small ovarian remnants associated to fat tissue could be detected. Both 17beta-estradiol (E2) and estrone (E1) blood levels were significantly lower in fish at transitional and male phases in comparison to breeding females, while levels of 11-ketotestosterone (11-KT) and testosterone (T) gradually increased in the transitional and male phases. In conclusion, the protogynous P. pagrus possess a delimited type bisexual gonad with a medio-dorsal ovarian area and a latero-ventral testicular zone. Sex inversion starts mainly after the female breeding season with an active spermatogonial proliferation. The testis tissues develop while ovarian tissues regress to disappear completely in the functional male. This process is accompanied by a sharp decrease of estrogens levels and a progressive increase of androgens levels. The physiological significance of such endocrine changes is discussed.