Male sex determination is initiated through the testis-determining factor SRY that promotes Sertoli cell differentiation and subsequent gonadal development. The basic helix-loop-helix (bHLH) gene Tcf21 was identified as one of the direct downstream targets of SRY. The current study was designed to identify the downstream targets of TCF21 and the potential cascade of bHLH genes that promote Sertoli cell differentiation. A modified ChIP-Chip comparative hybridization analysis identified 121 direct downstream binding targets for TCF21. The gene networks and cellular pathways potentially regulated by these TCF21 targets were identified. One of the main bHLH targets for TCF21 was the bHLH gene scleraxis (Scx). An embryonic ovarian gonadal cell culture was used to examine the functional role of Sry, Tcf21, and Scx to promote an in vitro sex reversal and induction of Sertoli cell differentiation. SRY and TCF21 were found to induce the initial stages of Sertoli cell differentiation, whereas SCX was found to induce the later stages of Sertoli cell differentiation associated with pubertal development using transferrin gene expression as a marker. Therefore, a cascade of SRY followed by TCF21 followed by SCX appears to promote, in part, Sertoli cell fate determination and subsequent differentiation. The current observations help elucidate the initial molecular events involved in the induction of Sertoli cell differentiation and testis development.