The transcription factor sex-determining region of the Y chromosome (SRY) plays a key role in human sex determination, because mutations in SRY cause disorders of sex development in XY individuals. During gonadal development, Sry in pre-Sertoli cells activates Sox9 gene transcription, committing the fate of the bipotential gonad to become a testis rather than an ovary. The high-mobility group domain of human SRY contains two independent nuclear localization signals, one bound by calmodulin (CaM) and the other by importin-β. Although XY females carry SRY mutations in these nuclear localization signals that affect SRY nuclear import in transfected cells, it is not known whether these transport mechanisms are essential for gonadal development and sex determination. Here, we show that mouse Sry protein binds CaM and that a CaM antagonist reduces CaM binding, nuclear accumulation, and transcriptional activity of Sry in transfected cells. CaM antagonist treatment of cultured, sexually indifferent XY mouse fetal gonads led to reduced expression of the Sry target gene Sox9, defects in testicular cord formation, and ectopic expression of the ovarian markers Rspondin1 and forkhead box L2. These results indicate the importance of CaM for SRY nuclear import, transcriptional activity, testis differentiation, and sex determination.