The orphan nuclear receptor steroidogenic factor 1 (SF-1) is expressed in the adrenal gland and gonads and is an important regulator of the expression of cytochrome P-450 steroidogenic enzymes in cultured cells. Targeted disruption of the SF-1 gene in mice shows that it is a critical participant in the genetic program that promotes the development of urogenital mesoderm into the adrenal gland and gonads. To assess the ability of SF-1 to regulate this differentiation pathway, we ectopically expressed SF-1 in murine embryonic stem (ES) cells. We found that stable expression of SF-1 is sufficient to alter ES cell morphology, permit cyclic AMP (cAMP) and retinoic acid-induced expression of the endogenous side chain cleavage enzyme gene, and consequently, promote steroidogenesis. While steroid production is dependent upon SF-1, cAMP induction of steroidogenesis does not enhance the responsiveness of an SF-1-specific reporter. Furthermore, the activity of a P450(SCC) promoter/luciferase reporter construct, which is induced by cAMP in steroidogenic cells and ES cells converted by stable expression of SF-1, is not induced by cAMP in wild-type ES cells transiently transfected with SF-1, suggesting that the induction of downstream gene products is required before steroidogenesis can occur. We demonstrate that mutants which disrupt the DNA binding domain or the AF2 transcriptional activation domain of SF-1 do not confer the steroidogenic phenotype to ES cells. Interestingly, however, AF2 mutants fused to the VP16 activation domain do confer the steroidogenic phenotype to ES cells, but only in the presence of a portion of the ligand binding domain. These studies extend the role of SF-1 in steroidogenic tissues to that of a dominant regulator of the steroidogenic cell phenotype.