The primitive sex cords, now called testis cords, have grown over the past few weeks, extending into the surrounding tissue. The cords now fuse together to form a network that will later connect the Wolffian duct to the developing testes.
Cells in the area secrete hormones, including testosterone. The hormones cause the degeneration of the Mullerian duct (which will continue to develop in the female) and the external genitalia to develop into a penis. The hormones also signal other areas throughout the body to develop male characteristics.