Many natural or synthetic chemicals may act as exogenous estrogens and affect the reproductive health of humans and wildlife. Since these xenoestrogens are ubiquitous, it is essential to monitor their presence in the environment. Hence, we developed a bioassay using the transgenic medaka (Oryzias latipes) embryo, in which the green fluorescent protein (GFP) was placed under the control of the gnrh3 promoter, one of the three paralogous gonadotropin-releasing hormone (GnRH) genes that regulate reproductive function and behavior. As medaka embryos are transparent, the fluorescent expression of GFP can be easily observed in vivo during development. We exposed newly fertilized medaka embryos to varying solutions of bisphenol A (BPA), nonylphenol (NP), 17β-estradiol (E2), or a river water sample, and monitored their development. During embryonic development, the mRNA levels of GnRHs, GnRH receptors, and estrogen receptors (ERs) were measured with quantitative real-time reverse transcription-PCR. Our results showed that the chemicals and the river water significantly decreased the fluorescent intensity of the GnRH3 neurons, postponed the eye development, and retarded the growth of the embryos. The three xenoestrogens also lowered the heart rate, lengthened the time to hatch, suppressed the expression of the three GnRH genes, and up-regulated the ERα mRNA level. In addition, the GnRH3 mRNA level was significantly correlated with the fluorescence intensity of the GnRH neurons. We concluded that the transgenic medaka embryo is a rapid and sensitive bioassay for screening environmental water samples. We also found that xenoestrogens had significant effects on GnRH gene expression and embryonic development.