In many egg‐laying reptiles, the incubation temperature of the egg determines the sex of the offspring, a process known as temperature‐dependent sex determination (TSD). In TSD sex determination is an “all or none” process and intersexes are rarely formed. How is the external signal of temperature transduced into a genetic signal that determines gonadal sex and channels sexual development? Studies with the red‐eared slider turtle have focused on the physiological, biochemical, and molecular cascades initiated by the temperature signal. Both male and female development are active processes—rather than the crganized/default system characteristic of vertebrates with genotypic sex determination—that require simultaneous activation and suppression of testis‐ and ovary‐determining cascades for normal sex determination. It appears that temperature accomplishes this end by acting on genes encoaing for steroidogenic enzymes and steroid hormone receptors and modifying the endocrine microenvironment in the embryo. The temperature experienced in development also has long‐term functional outcomes in addition to sex determination. Research with the leopard gecko indicates that incubation temperature as well as steroid hormones serve as organizers in shaping the adult phenotype, with temperature modulating sex hormone action in sexual differentiation. Finally, practical applications of this research have emerged for the conservation and restoration of endangered egg‐laying reptiles as well as the embryonic development of reptiles as biomarkers to monitor the estrogenic effects of common environmental contaminants. © 1994 Wiley‐Liss, Inc. Copyright © 1994 Wiley‐Liss, Inc.