The genital system consists of (1) gonads or primitive sex glands, (2) genital ducts, and (3) external genitalia. All three components go through an indifferent stage in which they may develop into either a male or a female. From week 7 the external genitalia start differentiating into specific sexual organs

In the third week of development, mesenchyme cells originating in the region of the primitive streak migrate around the cloacal membrane to form a pair of slightly elevated cloacal folds. Cranial to the cloacal membrane, the folds unite to form the genital tubercle.

Caudally, the folds are subdivided into urethral folds anteriorly and anal folds posteriorly.In the meantime, another pair of elevations, the genital swellings develop either side of the urethral folds. These swellings later form the scrotal swellings in the male and the labia majora in the female. The primordia are indistinguishable up until about week 12.

The development of the indifferent genitalia into the male genitalia is driven by the presence of androgens from the testes, namely dihydrotestosterone (DHT). Oestrogens in the female embryo are responsible for external genital development.

Ref: ( Langman's Medical Embryology, 13th edition, Page NO:268 )

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