During fetal testis development, fetal Leydig cells (FLCs) are found to be originated from multiple progenitor cells. FLC specification and function are under tight regulation of specific genes and signaling proteins. Furthermore, Sertoli cells play a crucial role to regulate FLC differentiation during fetal testis development. FLC progenitor- and FLC-produced biomolecules are also involved in the differentiation and activity of rodent FLCs. The main function of FLCs is to produce androgens to masculinize XY embryos. However, FLCs are capable of producing androstenedione but not testosterone due to the lack of 17ÎČ-HSD (17ÎČ-hydroxysteroid dehydrogenase), but fetal Sertoli cells express 17ÎČ-HSD which thus transforms androstenedione to testosterone in the fetal testis. On the other hand, FLCs produce activin A to regulate Sertoli cell proliferation, and Sertoli cells in turn modulate testis cord expansion. It is now generally accepted that adult Leydig cells (ALCs) gradually replace FLCs during postnatal development to produce testosterone to support spermatogenesis as FLCs undergo degeneration in neonatal and pre-pubertal testes. However, based on studies using genetic tracing mouse models, FLCs are found to persist in adult testes, making up ~20% of total Leydig cells. In this review, we evaluate the latest findings regarding the development, function and fate of FLCs during fetal and adult testis development.