The gonad contains two major cell lineages, germline and somatic cells. Little is known, however, about the somatic gonadal cell lineage in vertebrates. Using fate mapping studies and ablation experiments in medaka fish (Oryzias latipes), we determined that somatic gonadal precursors arise from the most posterior part of the sdf-1a expression domain in the lateral plate mesoderm at the early segmentation stage; this region has the properties of a gonadal field. Somatic gonadal precursors in this field, which continuously express sdf-1a, move anteriorly and medially to the prospective gonadal area by convergent movement. By the stage at which these somatic gonadal precursors have become located adjacent to the embryonic body, the precursors no longer replace the surrounding lateral plate mesoderm, becoming spatially organized into two distinct populations. We further show that, prior to reaching the prospective gonadal area, these populations can be distinguished by expression of either ftz-f1 or sox9b. These results clearly indicate that different populations of gonadal precursors are present before the formation of a single gonadal primordium, shedding new light on the developmental processes of somatic gonadal cell and subsequent sex differentiation.