The default development of an embryo is female, whether or not the final result is male or female. It takes several weeks for a Y chromosone to affect change, and by that time the nipples are already formed.
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Nipples remind us that gender is anything but clear-cut, especially in utero. Whatever your sex, everyone starts off as a woman in the womb.
For the first several weeks a developing embryo follows a "female blueprint," from reproductive organs to nipples. Only after about 60 days does the hormone testosterone kick in (for those of us with a Y chromosome), changing the genetic activity of cells in the genitals and brain. But by then those mammary papillae aren't going anywhere.
So the real question is: why do male nipples come equipped with nerves and blood vessels? In many male mammals nipple formation is stunted by hormones, but not in humans. Did prehistoric men nurse their young? The lack of evidence suggests not. More likely, full-grown nipples — being harmless — don't get weeded out by natural selection.
- http://www.livescience.com/32467-why-do-men-have-nipples.html
Another interesting facet of male nipples, is that they are the only 'sexually sensitive' male body part that does not have a dual function.
