Sexual identity is one of the most important factors that determine how an animal will develop. Although it controls many dimorphic tissues in the body, its most ancient role is in the germ line, where it species that some cells become sperm, and others become eggs. In most animals, these two fates occur in distinct sexes. However, certain nematodes like C. elegans produce XX hermaphrodites, which make both types of gametes. In these animals, a core sex-determination pathway regulates the development of both the body and the germ line. However, modifier genes alter the activity of this pathway in germ cells, and these changes are critical for allowing XX animals to produce oocytes and sperm in an otherwise female body. In this review, I focus on (1) the core sex-determination pathway, (2) the activity of the transcription factor TRA-1 and its immediate targets fog-1 and fog-3 in germ cells, (3) how the regulation of tra-2 activity allows XX spermatogenesis, and (4) howthe regulation of fem-3 activity maintains the appropriate balance between TRA-2 and FEM-3 in the germ line. Finally, I consider the major questions in this field that are driving new research.