Polycystic ovary syndrome (PCOS) is one of the most common causes of infertility females, affecting around 10% of women of reproductive age. Hyperandrogenism (elevated androgen levels), is one of the main diagnostical characteristics of this syndrome. Despite the high incidence of the disease, the etiology of PCOS is not completely understood, but appears to depend on both genetic and environmental causes. DNA variants in TOX3 locus have been associated with polycystic ovarian syndrome (PCOS) in several populations, but the exact functional mechanism of TOX3 in this disease or in the gonadal context is unclear. Unlike mammals, chicken gonads are steroidogenically active during early embryonic stages, making them an attractive model to study steroidogenic metabolic diseases. We identified TOX3 as a novel transcription factor expressed in chicken embryonic gonads. TOX3 mRNA and protein are expressed in Sertoli cells of the developing testis, colocalizing with AMH, SOX9 and DMRT1. In addition, TOX3 expression is negatively regulated by estrogens in vivo, but not induced during masculinization induced by estrogen inhibition. In vivo DMRT1 knock-down in male gonads resulted in a down-regulation of TOX3 expression, whereas DMRT1 over-expression caused an increase in TOX3 expression. In addition, DMRT1 ChIP-seq confirmed the binding of DMRT1 in the promoter region of the TOX3 gene, suggesting that DMRT1 directly regulates TOX3 expression. TOX3 over-expression in male gonads resulted in a significant decline in CYP17A1 positive steroidogenic Leydig cells. Taken together, this data suggests that DMRT1 regulation of TOX3 regulates expansion of the steroidogenic, either directly, via cell lineage allocation, or indirectly via signalling from the supporting to steroidogenic cell populations. Mutations in TOX3 could lead to unrestrained steroidogenesis in the gonad and elevated androgens. In the ovary, this could result in PCOS.