The process of early gonadal development and the mode of sexuality were examined in the three-spot damselfish Dascyllus trimaculatus. All gonads developed an ovarian lumen and primary-growth-stage oocytes after an initially undifferentiated state. From this ovarian state or from more developed ovaries, some gonads redifferentiated into testes. None of 130 individuals examined had a gonad containing degenerating vitellogenic oocytes and proliferating spermatogenic tissue. Nineteen individuals, however, had a gonad containing degenerating cortical–alveolus stage oocytes and proliferating spermatogenic tissue. The size of these individuals overlapped with the female size range in which most females were still in the middle of the maturation process or the smallest female size class in which most females had vitellogenic oocytes. This suggests that the transition toward maleness in these individuals is likely to have occurred after oocytes in their gonads attained cortical–alveolus stage, but before their final maturation and spawning as females, and that the protogynous pattern of gonadal development in D. trimaculatus is non-functional. The observed protogynous pattern seems to have been present in the common ancestor of the genus and have been retained in this descendant species.