Kiss1 neurons of the arcuate (ARC) nucleus form an interconnected network of cells that communicate via neurokinin B (encoded by Tac2) and its receptor (encoded by Tacr3) and play key roles in the control of the reproductive axis through sex hormone-regulated synthesis and release of kisspeptin peptides (Kp, encoded by Kiss1). The aim of this study was to determine whether the Kiss1 cell population of the ARC already displays sexually dimorphic features at embryonic age E16.5 in mice. At this time of development, Kiss1-GFP- and Kp-immunoreactive cell bodies were restricted to the ARC and not found in the pre-optic area (POA). The Kiss1-GFP cell population was identical in size between sexes but had significantly lower Kiss1, Tac2, and Tacr3 mRNA levels and lower Kp-ir fiber density in the POA in male compared to female fetuses. Receptors for androgen (Ar) and estrogen (Esr1, Esr2, Gpr30) and the Cyp19a1 gene (encoding the estradiol-producing enzyme aromatase) transcripts were also detected in fetal ARC Kiss1-GFP cells with significant sex differences for Ar (higher in males) and Esr1 (higher in females). Functional studies on primary cultures of sorted fetal Kiss1-GFP cells revealed a significant negative effect of estradiol treatment on neurite outgrowth on the fourth day of culture in the female group specifically. We conclude that the ARC Kiss1 cell population is already sexually differentiated at E16.5 and that its morphogenetic development may be particularly vulnerable to estradiol exposure at this early developmental time.