Genital malformations constitute the most common birth defects encountered in man and domestic animals. They occur more frequently in genetic males since the participation of many genes is required for sex differentiation to proceed in the male direction. The emerging insight, through the identification of genes involved in the sex differentiation cascade, is that over 85 percent of sex anomalies in human and domestic animal populations are not attributable to chromosome aberrations or to mutations in a known gene. Since a majority of severely malformed individuals are incapable of reproduction, the high rates of these defects have to be the results either of new mutations or of collaboration of environmental factors with genes. Increase in the prevalence of specific malformations in domestic animals often indicates increased concentration of liability genes brought together in the conceptus by inbreeding. However, in human populations where inbreeding is not the norm, such increases may reflect environment-induced new mutations or interaction of environmental agents with hormone sensitive genes. This review summarizes the information currently available on the genetics of major events in male sex differentiation and briefly discusses the collaborative role environment may play in disrupting different components of this process.