FSH, a glycoprotein hormone, is circulated from the pituitary and functions by binding to a specific FSH receptor (FSHR). FSHR is a G protein-coupled, seven-transmembrane receptor linked to the adenylyl cyclase or other pathways and is expressed in gonadal somatic cells. In some nonmammalian species, fshr expression is much higher in the ovary than in the testis during gonadal sex differentiation, suggesting that FSHR is involved in ovarian development in nonmammalian vertebrates. However, little is known of FSHR knockout phenotypes in these species. Here we screened for fshr mutations by a medaka (Oryzias latipes) target-induced local lesion in the genomes and identified one nonsense mutation located in the BXXBB motif, which is involved in G protein activation. Next, we used an in vitro reporter gene assay to demonstrate that this mutation prevents FSHR function. We then analyzed the phenotypes of fshr mutant medaka. The fshr mutant male medaka displayed normal testes and were fertile, whereas the mutant female fish displayed small ovaries and were infertile because vitellogenesis was inhibited. The mutant females also have suppressed expression of ovary-type aromatase (cyp19a1a), a steroidogenic enzyme responsible for the conversion of androgens to estrogens, resulting in decreased 17β-estradiol levels. Moreover, loss of FSHR function caused female-to-male sex reversal in some cases. In addition, the transgenic overexpression of fshr in fshr mutants rescued FSHR function. These findings strongly suggest that in the medaka, FSH regulates the ovarian development and the maintenance mainly by the elevation of estrogen levels. We present the first FSHR knockout phenotype in a nonmammalian species.