Answer
During the first several weeks, male and female embryos follow the same blueprint, which includes the development of nipples. However, at about six to seven weeks of gestation, a gene on the Y chromosome induces changes that lead to the development of the testes, after the testes are formed, the male fetus begins producing testosterone at about nine weeks of gestation, changing the genetic activity of cells in the genitals and brain. So the nipples are already there, however because of the production of testosterone, the nipples will not further develop to breasts like in woman.
Therefore, the development of nipples occurs in early stages of a fetus, before embryos become distinctly male or female.
