We studied the regulation of the yolk protein (YP) genes in the somatic cells of the gonads, using temperature sensitive mutations (tra-2ts) of transformer-2, a gene required for female sexual differentiation. XX;tra-2ts mutant animals were raised at the permissive temperature so that they developed as females and were then shifted to the restrictive male-determining temperature either 1-2 days before or 0-2 h after eclosion. These animals formed vitellogenic ovaries. Likewise, mutant gonads transplanted into either normal female hosts or normal male hosts, kept at the restrictive temperature, underwent vitellogenesis. Thus, the ovarian follicle cells can mature and express their YP genes in the absence of a functional product of the tra-2 gene. Although the gonadal somatic cells of ovary and testis may derive from the same progenitor cells, the testicular cells of XX;tra-2ts pseudomales did not express their YP genes nor take up YP from the haemolymph at the permissive female-determining temperature. We conclude that in the somatic cells of the gonad, the YP genes are no longer under direct control of the sex-determining genes, but instead are regulated by tissue specific factors present in the follicle cells. It is the formation of follicle cells which requires the activity of tra-2.