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During gestation, the cells of the primordial gonad that lie along the urogenital ridge are in a bipotential state, meaning they possess the ability to become either male cells ( Sertoli and Leydig cells ) or female cells ( follicle cells and Theca cells ).
SRY initiates testis differentiation by activating male-specific transcription factors that allow these bipotential cells to differentiate and proliferate.
SRY accomplishes this by upregulating SOX9, a transcription factor with a DNA-binding site very similar to SRY's.
SOX9 in turn upregulates fibroblast growth factor 9 ( Fgf9 ), which is necessary for proper Sertoli cell differentiation.
Fgf9 then feeds back and upregulates SOX9.
SOX9 can also upregulate itself by binding to its own enhancer region ( positive feedback loop ).
Once proper SOX9 levels are reached, the bipotential cells of the gonad begin to differentiate into Sertoli cells.
Additionally, cells expressing SRY will continue to proliferate to form the primordial testis.
While this constitutes the basic series of events, this brief review should be taken with caution since there are many more factors that influence sex differentiation.

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