Background: Dmrt I is a highly conserved gene involved in the determination and early differentiation phase of the primordial gonad in vertebrates. In the fish medaka dmrt I bY, a functional duplicate of the autosomal dmrt I a gene on the Y-chromosome, has been shown to be the master regulator of male gonadal development, comparable to Sry in mammals. In males mRNA and protein expression was observed before morphological sex differentiation in the somatic cells surrounding primordial germ cells (PGCs) of the gonadal anlage and later on exclusively in Sertoli cells. This suggested a role for dmrt I bY during male gonad and germ cell development. Results: We provide functional evidence that expression of dmrt I bY leads to negative regulation of PGC proliferation. Flow cytometric measurements revealed a G2 arrest of dmrt I bY expressing cells. Interestingly, also non-transfected cells displayed a significantly lower fraction of proliferating cells, pointing to a possible non-cell autonomous action of dmrt I bY. Injection of antisense morpholinos led to an increase of PGCs in genetically male embryos due to loss of proliferation inhibition. Conclusion: In medaka, dmrt I bY mediates a mitotic arrest of PGCs in males prior to testes differentiation at the sex determination stage. This occurs possibly via a cross-talk of Sertoli cells and PGCs.