Adult Leydig cells develop from undifferentiated mesenchymal-like stem cells (stem Leydig cells, SLCs) present in the interstitial compartment of the early postnatal testis. Putative SLCs also have been identified in peritubular and perivascular locations of the adult testis. The latter cells, which normally are quiescent, are capable of regenerating new Leydig cells upon the loss of the adult cells. Recent studies have identified several protein markers to identify these cells, including nestin, PDGFRα, COUP-TFII, CD51 and CD90. We have shown that the proliferation of the SLCs is stimulated by DHH, FGF2, PDGFBB, activin and PDGFAA. Suppression of proliferation occurred with TGFβ, androgen and PKA signaling. The differentiation of the SLCs into testosterone-producing Leydig cells was found to be regulated positively by DHH (Desert hedgehog), lithium-induced signaling and activin; and negatively by TGFβ, PDGFBB, FGF2, Notch and Wnt signaling. DHH, by itself, was found to induce SLC differentiation into LH-responsive steroidogenic cells, suggesting that DHH plays a critical role in the commitment of SLC into the Leydig lineage. These studies, taken together, address the function and regulation of low turnover stem cells in a complex, adult organ, and also have potential application to the treatment of androgen deficiency.