Distinct from the conventional IGFs (IGF-1 and IGF-2), here we report the identification of a novel IGF (herein called IGF-3) encoded by a separate gene from teleost species. The IGF-3 cDNA sequences were cloned from tilapia and zebrafish, and predicted from the medaka genome and EST databases. Similar to IGF-1 and IGF-2, IGF-3 is also comprised of five domains (B, C, A, D, E) with a similar tertiary protein structure, despite a low sequence homology among them. Phylogenetic analysis reveals that the IGF-3 sequences from different teleosts cluster to form a distinctive clade separate from IGF-1 and IGF-2. The expression of this novel IGF-3 is gonad-specific and starts early in fish development. In situ hybridization revealed that IGF-3 is expressed in the somatic cells and later in granulosa cells of the ovary, and in the interstitial cells of the testis. These findings highlight the importance of this novel IGF in teleost gonadal development and reproduction.