Sexual differentiation of the reproductive cells (gonidia) of the green alga Volvox carteri f. nagariensis Iyengar is triggered by a glycoprotein inducer which is released into the medium by sexual male spheroids. If added, it induces the next generation cycle to become sexual. About 3000 pheromone molecules per spheroid will give full induction. Specific binding sites for the pheromone have been identified in the extracellular matrix in which characteristic events take place. Inducer binding and action are reversible for a certain time period until the start of cell division; thereafter, determination of the gonidia is final. Extent of sexual induction is proportional to the duration of inducer pulses. Inhibition of sexual induction reveals as essential extracellular components of the induction system high molecular acidic glycoproteins, cyclic nucleotides, Ca2+/calmodulin, and pheromone-controlled gene products. Low matrix levels of cyclic AMP and cyclic GMP seem to stimulate induction; high levels to inhibit.