In diandric sex-reversing fishes, sexually active males and females (primary phase) regularly transform into an alternative reproductive morph, terminal-phase males, that are morphologically and behaviorally distinct. The transformation from primary to terminal phase is associated with a twofold increase in the number of luteinizing hormone-releasing hormone (LHRH) immunopositive cells in the forebrain preoptic area, a region involved in both the initial development and daily control of reproductive physiology and behavior. We now show that implants of 11-ketotestosterone induce increases in LHRH cell number in both primary phase sexes to the level observed in field-collected terminal phase males. Conversely, gonadal steroids had no effect on the number of LHRH preoptic cells in terminal phase males, suggesting that this is indeed a terminal stage in the development of this species. These results demonstrate that transition to the terminal phase by both sexes involves a parallel and convergent change in LHRH cell number, which utilizes an evolutionarily conserved mechanism of sexual differentiation: the inductive effects of gonadal steroid hormones.