The organ culture system is a useful tool to study the effects of various factors on the development of undifferentiated gonads. In this study, we first established an organ culture system for gonads of all genetic male and female Nile tilapia at 5–122 days after hatching (dah). This short-term (3 days) organ culture system was then used to examine the stability of the immunoreactivity of aromatase (the enzyme which converts androgen to estrogen, thus playing a crucial role in ovarian differentiation) in steroid-producing cells (SPCs). Immunohistochemical analyses revealed that aromatase-positive cells could be initially detected in the vicinity of blood vessels in the XX gonads at 7 dah. These SPCs completely lost their immunoreactivity after 3 days in culture, indicating the instability of SPCs during early ovarian differentiation. In contrast, the immunoreactivity of the SPCs was maintained to some extent even after 3 days in culture, if the gonads were from 15–23 dah. In XX gonads collected at 122 dah, there were two major populations of SPCs: one in the vicinity of the blood vessel and the other near the oocyte. The aromatase immunoreactivity was maintained in SPCs located around the oocytes, but not in those in the vicinity of the blood vessel, after 3 days in culture. These results suggest that the SPCs originate from the cells in the vicinity of the blood vessels prior to the initial ovarian differentiation in tilapia and that the degree of differentiation of SPCs is dependent on their location in the ovary.