The fertility of sex-reversed XY female mice is severely impaired by a massive loss of oocytes and failure of meiotic progression. This phenomenon remains an outstanding mystery. We sought to determine the molecular etiology of XY oocyte dysfunction by generating sex-reversed females that bear genetic ablation of Sry, a vital sex determination gene, on an inbred C57BL/6 background. These mutant mice, termed XYsry- mutants, showed severe attrition of germ cells during fetal development, resulting in the depletion of ovarian germ cells prior to sexual maturation. Comprehensive transcriptome analyses of primordial germ cells (PGCs) and postnatal oocytes demonstrated that XYsry- females had deviated significantly from normal developmental processes during the stages of mitotic proliferation. The impaired proliferation of XYsry- PGCs was associated with aberrant β-catenin signaling and the excessive expression of transposable elements. Upon entry to the meiotic stage, XYsry- oocytes demonstrated extensive defects, including the impairment of crossover formation, the failure of primordial follicle maintenance, and no capacity for embryo development. Together, these results suggest potential molecular causes for germ cell disruption in sex-reversed female mice, thereby providing insights into disorders of sex differentiation in humans, such as "Swyer syndrome," in which patients with an XY karyotype present as typical females and are infertile.