The early brain development, at the time of gonadal differentiation was investigated using a protandrous teleost, black porgy. This natural model of monosex juvenile fish avoids the potential complexity of sexual dimorphism. Brain neurogenesis was evaluated by histological analyses of the diencephalon, at the time of testicular differentiation (in fish between 90 and 150 days after hatching). Increases in the number of both Nissl-stained total brain cells, and Pcna-immunostained proliferative brain cells were observed in specific area of the diencephalon, such as ventromedialis thalami and posterior preoptic area, revealing brain cell proliferation. qPCR analyses showed significantly higher expression of the radial glial cell marker blbp and neuron marker bdnf. Strong immunohistochemical staining of Blbp and extended cellular projections were observed. A peak expression of aromatase (cyp19a1b), as well as an increase in estradiol (E2 ) content were also detected in the early brain. These data demonstrate that during gonadal differentiation, the early brain exhibits increased E2 synthesis, cell proliferation, and neurogenesis. To investigate the role of E2 in early brain, undifferentiated fish were treated with E2 or aromatase inhibitor (AI). E2 treatment upregulated brain cyp19a1b and blbp expression, and enhanced brain cell proliferation. Conversely, AI reduced brain cell proliferation. Castration experiment did not influence the brain gene expression patterns and the brain cell number. Our data clearly support E2 biosynthesis in the early brain, and that brain E2 induces neurogenesis. These peak activity patterns in the early brain occur at the time of gonad differentiation but are independent of the gonads.