There is increasing evidence that biological factors (i.e., hormones) support the development of sex differences in behavior by organizing brain systems in prenatal life. However, the behavioral significance of the surge in reproductive steroids that results from the transient activation of the hypothalamic-pituitary-gonadal (HPG) axis around 3-months of age is largely unknown. The goal of the present study was to investigate the role of early postnatal activation of the HPG axis in the development of sex differences in human behavior. Participants included 54 children between 18 and 24 months (32 males and 22 females) and their parents. Infants and their caregivers participated in two, eight minute play sessions that were video-taped and later coded for children’s aggressive behavior and vocal ability. During each session, children wore an actigraph (Actiwatch, Philips Respironics) to provide a nonbiased assessment of activity levels. In addition, toddler’s temperament was measured using the Brief Infant Toddler Social-Emotional Assessment (BITSEA). Saliva samples from each infant were collected at 3-4 months of age and levels of testosterone were measured. Digit ratio levels were also measured at 3-4 months and used as a marker of prenatal androgen levels. The data indicated that boys were more aggressive, engaged in higher levels or activity, and showed less developed language ability. In addition, our results demonstrated that hormone markers associated with higher (i.e., more male-typical) testosterone were related to more aggressive behaviors, higher activity levels, expression of fewer total words, and a shorter duration of time spent vocalizing. A novel finding was that higher testosterone (i.e., more male-typical) levels in early postnatal life predicted less time spent vocalizing, for both sexes together and within males. The present research suggests that hormone levels in early postnatal life may contribute to the development of gender phenotypes, potentially making this a critical period for the development of language and other gender-linked behaviors.