Many important psychological characteristics show sex differences, and are influenced by sex hormones at different developmental periods. We focus on the role of sex hormones in early development, particularly the differential effects of prenatal androgens on aspects of gender development. Increasing evidence confirms that prenatal androgens have facilitative effects on male-typed activity interests and engagement (including child toy preferences and adult careers), and spatial abilities, but relatively minimal effects on gender identity. Recent emphasis has been directed to the psychological mechanisms underlying these effects (including sex differences in propulsive movement, and androgen effects on interest in people versus things), and neural substrates of androgen effects (including regional brain volumes, and neural responses to mental rotation, sexually arousing stimuli, emotion, and reward). Ongoing and planned work is focused on understanding the ways in which hormones act jointly with the social environment across time to produce varying trajectories of gender development, and clarifying mechanisms by which androgens affect behaviors. Such work will be facilitated by applying lessons from other species, and by expanding methodology. Understanding hormonal influences on gender development enhances knowledge of psychological development generally, and has important implications for basic and applied questions, including sex differences in psychopathology, women's underrepresentation in science and math, and clinical care of individuals with variations in gender expression.