Hypospadias is a congenital disorder caused by a failure of the urethra to close on the developing male penis. It is the most common birth defect, affecting 1:125 live male births in Australia. The incidence of hypospadias has increased rapidly over the past few decades and this is now unequivocally linked to our exposure to endocrine disrupting chemicals. Using a combination of mouse models and human data we have identified a novel gene Leat1 as a hormonally regulated, master regulator of urethral closure. We have defined the developmental mechanism driving urethral closure and shown that estrogen (as well as androgen) plays a critical and endogenous role in this process. Together these data redefine our understanding of the developmental and hormonal control of penis development. They also provide a new framework for understanding the impact of endocrine disruption on this process and identify important new target genes in penis development and the aetiology of hypospadias.