Testosterone exposure during midgestation differentiates neural circuits controlling sex-specific behaviours and patterns of gonadotrophin secretion in male sheep. Testosterone acts through androgen receptors (AR) and/or after aromatisation to oestradiol and binding to oestrogen receptors. The present study assessed the role of AR activation in male sexual differentiation. We compared rams that were exposed to the AR antagonist flutamide (Flu) throughout the critical period (i.e. days 30–90 of gestation) to control rams and ewes that received no prenatal treatments. The external genitalia of all Flu rams were phenotypically female. Testes were positioned s.c. in the inguinal region of the abdomen, exhibited seasonally impaired androgen secretion and were azospermic. Flu rams displayed male-typical precopulatory and mounting behaviours but could not intromit or ejaculate because they lacked a penis. Flu rams exhibited greater mounting behaviour than control rams and, similar to controls, showed sexual partner preferences for oestrous ewes. Neither control, nor Flu rams responded to oestradiol treatments with displays of female-typical receptive behaviour or LH surge responses, whereas all control ewes responded as expected. The ovine sexually dimorphic nucleus in Flu rams was intermediate in volume between control rams and ewes and significantly different from both. These results indicate that prenatal anti-androgen exposure is not able to block male sexual differentiation in sheep and suggest that compensatory mechanisms intervene to maintain sufficient androgen stimulation during development.