The slowly maturing, long-lived rodent Octodon degus (degu) provides a unique opportunity to examine the development of the circadian system during adolescence. These studies characterize entrained and free-running activity rhythms in gonadally intact and prepubertally gonadectomized male and female degus across the first year of life to clarify the impact of sex and gonadal hormones on the circadian system during adolescence. Gonadally intact degus exhibited a delay in the phase angle of activity onset (Psi(on)) during puberty, which reversed as animals became reproductively competent. Gonadectomy before puberty prevented this phase delay. However, the effect of gonadal hormones during puberty on Psi(on) does not result from changes in the period of the underlying circadian pacemaker. A sex difference in Psi(on) and free-running period (tau) emerged several months after puberty; these developmental changes are not likely to be related, since the sex difference in Psi(on) emerged before the sex difference in tau. Changes in the levels of circulating hormones cannot explain the emergence of these sex differences, since there is a rather lengthy delay between the age at which degus reach sexual maturity and the age at which Psi(on) and tau become sexually dimorphic. However, postnatal exposure to gonadal hormones is required for sexual differentiation of Psi(on) and tau, since these sex differences were absent in prepubertally gonadectomized degus. These data suggest that gonadal hormones modulate the circadian system during adolescent development and provide a new model for postpubertal sexual differentiation of a central nervous system structure.