46,XY disorders of sex development (DSD) comprise a heterogeneous group of congenital conditions. Mutations in a variety of genes can affect gonadal development or androgen biosynthesis/action and thereby influence the development of the internal and external genital organs.The objective of the study was to identify the genetic cause in two 46,XY sisters of a consanguineous family with DSD and gonadal tumor formation.We used a next-generation sequencing approach by exome sequencing. Electrophysiological and high-resolution ultrasound examination of peripheral nerves as well as histopathological examination of the gonads were performed.We identified a novel homozygous R124Q mutation in the desert hedgehog gene (DHH), which alters a conserved residue among the three mammalian Hedgehog ligands sonic hedgehog, Indian hedgehog, and desert hedgehog. No other relevant mutations in DSD-related genes were encountered. The gonads of one patient showed partial gonadal dysgenesis with loss of Leydig cells in tubular areas with seminoma in situ and a hyperplasia of Leydig cell-like cells expressing CYP17A1 in more dysgenetic parts of the gonad. In addition, both patients suffer from a polyneuropathy. High-resolution ultrasound revealed a structural change of peripheral nerve structure that fits well to a minifascicle formation of peripheral nerves.Mutations in DHH play a role in 46,XY gonadal dysgenesis and are associated with seminoma formation and a neuropathy with minifascicle formation. Gonadal dysgenesis in these cases may be due to impairment of Sertoli cell-Leydig cell interaction during gonadal development.