The sex determining region Y (SRY/Sry) gene is necessary and sufficient for testis determination and differentiation in mammals. SRY/Sry encodes a putative transcription factor with a high mobility group (HMG) DNA-binding domain. The spatiotemporal regulation of Sry expression suggests that a brief action of SRY in a limited number of progenitor cells (pre-Sertoli cells) before the onset of default ovarian differentiation is sufficient to switch on testicular differentiation. Recent identification and characterization of the Krüppel-associated box only (KRAB-O) protein as an SRY-interacting protein have provided experimental evidence supporting an interesting model for SRY function. In this model, SRY recruits the KRAB-KAP1 (KRAB-associating protein 1) complex as a chromatin modulator, which provides a molecular mechanism of SRY as a transcription factor. Moreover, the sufficiency of a brief action of SRY for testis differentiation can be partly explained by the heritability of KRAB-mediated chromatin remodeling. Although it is currently uncertain whether KRAB-O is the only KRAB protein with which SRY interacts, we hypothesize that KRAB-O or yet-to-be identified KRAB-containing proteins might play various roles in sex determination and gonadal differentiation.