The relaxin family, a group of peptides, is now considered as a major player in the reproductive processes in teleosts fishes. Insulin-like peptide 3 (INSL3) is a core relaxin, plays a key role in testis development and male fertility. However, its regulatory mechanism remains unclear. In the present research, insl3 gene of the hermaphroditic orange-spotted grouper was isolated. The entire coding sequence of insl3 was found to be 384 bp encoding a protein of 127 amino acids. Insl3 expression was mainly detected in gonad, kidney, heart, and head kidney. Compared to ovary, testis showed a significantly higher expression level of insl3. In the gonad, INSL3 could induce a significant increase of Akt and ERK protein phosphorylation. Overexpression of insl3 promoted the proliferation of gonidium-like cells and the expression of male-related factors. These results contribute to the better understanding of INSL3 functions and its involvement in the regulation mechanisms behind gonad development and sex reversal in orange-spotted grouper.