Plasticity in sex differentiation is known to be common in teleost fishes. Anemonefishes are protandrous; females are the largest and dominant members of social groups, displaying frequent aggressive behavior towards other members of groups. The second-ranked individuals become males and others remain as non-reproductive individuals. Here we examine the influence of social interaction in-group on sex differentiation in the false clown anemonefish, Amphiprion ocellaris, under laboratory conditions. Three juvenile anemonefish were kept in a tank for 180 days and their behaviors observed once a month. The social rank of individuals was distinguishable by their interactions in a group, with rank order clearly correlated with aggressive and appeasing behaviors. The dominant individuals occupied the shelter in the tank from the start to completion of the observation period. The body mass of dominant individuals increased compared to group-housed control fish, while third-ranked individuals showed growth suppression. The ratio of testicular tissue in gonads increased in dominant and second-ranked individuals but decreased in the third-ranked individuals. Differences in the plasma concentrations of estradiol, testosterone, and cortisol were not significant, but the concentration of 11-ketotestosterone was significantly higher in dominant individuals. These results suggest that, in false clown anemonefish, reproductive suppression of lower-ranked individuals becomes apparent in the first stage of group formation, and sex differentiation of upper-ranked individuals is gradually determined by long-term social interactions.