In vitro transformation of precursors to androgens and estrogens was studied in breast tissues from 7 phenotypic males with gynecomastia and 3 normal females. All the tissues studied showed formation of dihydrotestosterone and estrogens, demonstrating the presence of 5.alpha.-reductase and aromatizing enzymes. The results on the values of urinary estrogens before and after surgical removal of the breast tissue substantiate the biosynthetic potential of gynecomastic tissue. The etiological significance of these findings vis-a-vis gynecomastia is discussed.