Normal gonad development assures the fertility of the individual. The properly functioning gonads must contain a sufficient number of the viable germ cells, possess a correct architecture and tissue structure, and assure the proper hormonal regulation. This is achieved by the interplay between the germ cells and different types of somatic cells. N-cadherin coded by the Cdh2 gene plays a critical role in this interplay. To gain an insight into the role of N-cadherin in the development of mouse gonads, we used the Cre-loxP system to knock out N-cadherin separately in two cell lines the SF1 somatic cells and the OCT4 germ cells. We observed that N-cadherin plays a key role in the survival of both female and male germ cells. However, the N-cadherin is not necessary for the differentiation of the Sertoli cells or the initiation of the formation of testis cords or ovigerous cords. In the later stages of gonad development, N-cadherin is important for the maintenance of testis cord structure and is required for the formation of steroidogenic cells. In the ovaries, N-cadherin is necessary for the formation of the ovarian follicles. These results indicate that N-cadherin plays a major role in gonad differentiation, structuralization, and function.