Infertile ovotestis (mixture of ovary and testis) often occurs in intersex individuals under certain pathological and physiological conditions. However, how ovotestis is formed remains largely unknown. Here, we report the first comprehensive single-cell developmental atlas of the model ovotestis. We provide an overview of cell identities and a roadmap of germline, niche, and stem cell development in ovotestis by cell lineage reconstruction and a uniform manifold approximation and projection. We identify common progenitors of germline stem cells with two states, which reveal their bipotential nature to differentiate into both spermatogonial stem cells and female germline stem cells. Moreover, we found that ovotestis infertility was caused by degradation of female germline cells via liquid-liquid phase separation of the proteasomes in the nucleus, and impaired histone-to-protamine replacement in spermatid differentiation. Notably, signaling pathways in gonadal niche cells and their interaction with germlines synergistically determined distinct cell fate of both male and female germlines. Overall, we reveal a cellular fate map of germline and niche cell development that shapes cell differentiation direction of ovotestis, and provide novel insights into ovotestis development.