It sounds like your little guy is reactive on leash... which is very, very common. Unless something really traumatic happened, it's hard to say when a dog develops the behavior, but it becomes rewarding instantly. Your dog growls at a passing on-leash dog, and the dog walks away. The dog is actually walking away because they are on a WALK, but your dog doesn't realize that. To him, his warning drove the other dog away, and his efforts were rewarded.

I'm dealing with the exact same stuff with Fozzie. He is awesome with any other dog off-leash, but he developed the annoying habit of getting growly/grumbly toward other dogs passing closely on-leash. I'm pretty sure it's due to my (GRRRR) neighbors whose Weimaraners are constantly jumping the fence and harassing us on walks. Gonzo is great on-leash, but began to react after Fozzie reacted when I walked them together. I totally feel for you! It's really important to nip this in the bud as soon as possible, because his anxiety could easily rub off on your female.

What works for Fozzie is desensitizing him to seeing on-leash dogs. Are you in Obedience classes currently? It would help a ton if you were. I asked my Obedience instructors and their dogs, and other people in the classes, to help by walking around a short distance from Fozzie. The idea is to get your dog focused on you RIGHT before they reach their threshold, that being the point at which they are focused on the other dog, reacting, and not interested in learning new behaviors from you. Once a dog is over their threshold, he is no longer able to learn a new behavior. With Fozzie, I would allow him to look at the other dog, click/treat him for doing so without any negative reaction, practice his heeling and watch me's, and give him lots of praise.

SLOWLY move closer to the other dog, while practicing watch me's and rewarding him for calmly checking out the other dog, without your dog going over threshold. Keep moving as much as possible, keep it exciting and happy, and don't punish him, as that will only exacerbate his negative view of meeting other dogs on-leash. Pay careful attention to his body language and ability to focus on you, to know when you're getting too close too soon. I was able to move this along fairly quickly with Fozzie, because he's insanely food driven. Once he realized that seeing another dog on-leash equals food and praise, it wasn't difficult to convince him to focus on me and be polite. I now make them heel when ever we're passing another dog, just to keep them close and focused on me, and I do NOT allow them to meet strange dogs on-leash unless the other person is some one I know and trust. The dynamics of two dogs meeting on-leash is totally off... they are nose to nose, which is threatening and unnatural, one or both dogs are often straining on the leash and leaning forward, which is dominant posture, and many dogs feel uncomfortable and cornered on-leash. The best way for dogs to "meet" on-leash is parallel walking, and allowing them to check each other out from the side rather than head on.

I am still working with Fozzie, it's an ongoing process... but he's much better. He only slips up when the other on-leash dog is downright obnoxious, and it's hard to blame him for that. If you see another dog that you will have to pass up ahead, and it's straining/lunging/out of control, it's always a good idea to find an escape route or turn around and walk the other way, whether your dog is reactive or not. It sucks that a few encounters with irresponsible owners/rude dogs can cause on-leash aggression, and it will definitely take work, but it's completely possible.