Hermaphroditism is often referred to as intersex or intersexuality. Some consider it the third gender. People who are intersex fall into one of three categories: true, female pseudo or male pseudo. (For more info on intersex, check out the Intersex Society of North America.)
True hermaphrodites are born with both ovarian and testicular tissue. The tissue can either be combined or people can have one of each that are separated. In these cases, if female genitalia are present and the baby has an XX chromosome, they are raised to be female. On the other hand if they have outer male genitalia and the XY chromosome, they are raised male.
The outer appearance of true hermaphrodites may be ambiguous and look neither fully male nor female. A split scrotum, partially fused labia and a phallus, ranging from a small penis to an enlarged clitoris are all common in ambiguous genitalia.