The widespread occurrence of hermaphroditism in teleosts has interested not only fish biologists, but also evolutionary ecologists and resource managers. Two hermaphroditic grouper species, the chocolate hind (Cephalopholis boenak) and the orange-spotted grouper (Epinephelus coioides) were studied in relation to their early gonad development. The former is the last remaining grouper of any abundance in Hong Kong waters; the later is the most common mariculture grouper in southern China. Both species are confirmed as diandric, where some individuals mature directly as male (primary males) and others first mature as female and then change sex to male at a later stage (secondary males). Unlike some other diandric, protogynous hermaphrodites where primary males have distinct male gonads prior to maturation, all juveniles passed through an ovarian phase then a bisexual phase prior to sexual differentiation and first sexual maturation. These findings improve our understanding of sexual ontogeny in groupers and demonstrate the importance of including early gonad examination in the diagnosis of hermaphroditism. Using a clearly defined set of diagnostic criteria, a re-examination of all primary literature was conducted to document the incidence of hermaphroditism among all teleost families. We are now using our improved understanding of the ecology, life history and social behaviour of groupers to assist with their conservation and management.