The objective of this study was to investigate the effects of the aromatase inhibitor (AI) letrozole on gonadal development, serum steroids and aromatase activities in 2-year-old female red spotted grouper (Epinephelus akaara) during reproductive season. Groupers were divided into two groups, one implanted with aromatase inhibitor (AI, 5 mg/kg body weight) and the other elastomer without AI into peritoneal cavity once every four weeks for 8 weeks. Spermiation was checked through gentle abdominal pressure every 2 weeks. Blood samples were obtained from 6 fish of each group every 4 weeks for later analysis of sex steroids. After blood samples were collected, forebrain, midbrain, hindbrain, and gonads were collected and stored at -70 degrees C for later aromatase activity measurement and gonadal histological study. Significantly lower gondadosomatic index (GSI) was observed in AI-implanted group. Fish implanted with AI once showed complete degradation of oocytes and sex inversion with developing testicular tissues in the 4th week. AI induced females to develop into functional males with authentic males testes similar in structure to those in normal males. Spermiating rate of AI-treated males were 14.3%, 35.3%, and 48.4%in the 4th, 6th, and 8th week, respectively, while all fish in the control group were still female with developing ovaries. Aromatase activities in gonads decreased significantly after implantation with aromatase inhibitor, but showed no significant difference between control and AI-implanted group. No difference in serum testosterone (T) levels was observed in control and AI-treated group, while serum levels of 17beta-estradiol (E(2)) decreased but 11-ketotestosterone (11-KT) concentration increased significantly. The present results suggest that the decrease in serum 17beta-estradiol (E(2)) and increase in 11-KT levels may be important for sex inversion induced by aromatase inhibitor in red spotted grouper.