Two Dascyllus reticulatus populations from Madang, Papua New Guinea exhibited diandric protogyny. In both populations, gonads began as undifferentiated, and then developed oocytes in the primary growth stage and an ovarian lumen. From this ovarian state or from more developed ovaries containing oocytes beyond the primary‐growth stage, some gonads developed into testes. The first sign of testicular development was degeneration of oocytes, degeneration of oocytes in the primary growth stage in ovarian gonads and degeneration of oocytes of all growth stages present including the primary growth stage in ovaries, which was then followed by development of spermatogenic tissue. In both populations, most of the fish that had gonads with degenerating oocytes were smaller than the smallest mature females, indicating that development towards testes was mostly initiated in immature gonads containing only pre‐vitellogenic oocytes. On some occasions, however, females as large as other mature females also had gonads with degenerating oocytes, suggesting that development towards testes may have occurred in mature ovaries as well. This latter notion is further strengthened by the discovery of a fish having a gonad that contained both degenerating vitellogenic oocytes and developing spermatogenic tissue. Taken together, these results suggest that D. reticulatus can exhibit diandric protogyny, because testes in D. reticulatus developed from juvenile gonads as well as from mature ovaries.