Adrenal glands and gonads share a common primordium (AGP), but the molecular events driving differentiation are poorly understood. Here we demonstrate that the Wilms tumor suppressor WT1 is a key factor defining AGP identity by inhibiting the steroidogenic differentiation process. Indeed, ectopic expression of WT1 precludes differentiation into adrenocortical steroidogenic cells by locking them into a progenitor state. Chromatin immunoprecipitation experiments identify Tcf21 and Gli1 as direct targets of WT1. Moreover, cell lineage tracing analyses identify a long-living progenitor population within the adrenal gland, characterized by the expression of WT1, GATA4, GLI1, and TCF21, that can generate steroidogenic cells in vivo. Strikingly, gonadectomy dramatically activates these WT1⁺ cells and leads to their differentiation into gonadal steroidogenic tissue. Thus, our data describe a mechanism of response to organ loss by recreating hormone-producing cells at a heterotopic site.