Mammalian oocytes and spermatozoa derive from fetal cells shared by the sexes. These primordial germ cells (PGCs) migrate to the developing somatic gonad, giving rise to oocytes or spermatozoa. These opposing sexual fates are determined not by the PGCs' own sex chromosome constitution (XX or XY), but by the sexual identity of the fetal gonad that they enter. We asked whether PGCs undergo a developmental transition that enables them to respond to feminizing or masculinizing cues from fetal ovary or testis. We conducted in vivo genetic studies of DAZL, an RNA-binding protein expressed in both ovarian and testicular germ cells. We found that germ cells in C57BL/6 Dazl--deficient fetuses-whether XX or XY--migrate to the gonad but do not develop either male or female features. Instead, they remain in a sexually undifferentiated state similar to that of migrating PGCs. Thus, germ cells in C57BL/6 Dazl-deficient fetuses do not respond to sexual cues from ovary or testis, whereas the earlier processes of germ cell specification and migration are unaffected. We propose that PGCs of both XX and XY fetuses undergo licensing, an active developmental transition that enables the resultant gametogenesis-competent cells to respond to feminizing or masculinizing cues produced by the fetal ovary or testis and hence to embark on oogenesis or spermatogenesis. In C57BL/6 mice, Dazl is required for licensing. Licensing serves as a gateway from the embryonic processes shared between the sexes--germ cell specification and migration--to the sex-specific pathways of oogenesis and spermatogenesis.