In somatic cells of Drosophila, the ratio of X chromosomes to autosomes (X:A ratio) determines sex and dosage compensation. The present paper addresses the question of whether germ cells also use the X:A ratio for sex determination and dosage compensation. Triploid female embryos were generated which, through the loss of an unstable ring-X chromosome, contained some germ cells of 2X;3A constitution in their ovaries. Such germ cells were shown to differentiate along one of two alternative pathways: a minority developed into normal female oocytes and eggs; the majority developed into abnormal multicellular cysts. An X:A ratio of 1 is, therefore, required in female germ cell development, at least in the mature ovary after stem cell division.—Abnormal development of female germ cells was also observed when 2X;2A germ cells which were homozygous or trans -heterozygous for mutant alleles at the Sex-lethal locus were transplanted into normal female host embryos at the blastoderm stage. Germ cells homozygous for amorphic alleles failed to give rise to normal eggs. Instead, they formed multicellular cysts, very similar to those formed by 2X;3A cells. Zygotic Sxl+ activity is, therefore, also necessary for the development of normal female germ cells. No abnormalities were detected in transplanted germ cells from female embryos whose mothers had been homozygous for the mutation daughterless. When normal XY germ cells were transplanted into female embryos, no traces of such cells could be found in the adult ovary. XY germ cells seem, therefore, not to develop as far as 2X;3A or Sxl homozygous cells in a female gonad. This indicates that neither 2X;3A nor Sxl homozygous germ cells are equivalent to normal XY germ cells.