Leydig cells (LCs) are thought to differentiate from spindle-shaped precursor cells that exhibit some aspects of differentiated function, including 3-hydroxysteroid dehydrogenase (3HSD) activity. The precursor cells ultimately derive from undifferentiated stem LCs (SLCs), which are postulated to be present in testes before the onset of precursor cell differentiation. We searched for cells in the neonatal rat testis with the abilities to: (i) proliferate and expand indefinitely in vitro (self renew); (ii) differentiate (i.e., 3HSD and ultimately synthesize testosterone); and (iii) when transplanted into host rat testes, colonize the interstitium and subsequently differentiate in vivo. At 1 week postpartum, spindle-shaped cells were seen in the testicular interstitium that differed from the precursor cells in that they were 3HSD-negative, luteinizing hormone (LH) receptor (LHR)-negative, and platelet-derived growth factor receptor ␣ (PDGFR␣)-positive. These cells were purified from the testes of 1-week-old rats. The cells contained proteins known to be involved in LC development, including GATA4, c-kit receptor, and leukemia inhibitory factor receptor. The putative SLCs expanded over the course of 6 months while remaining undifferentiated. When treated in media that contained thyroid hormone, insulin-like growth factor I, and LH, 40% of the putative SLCs came to express 3HSD and to synthesize testosterone. When transplanted into host rat testes from which LCs had been eliminated, the putative SLCs colonized the interstitium and subsequently expressed 3HSD, demonstrating their ability to differentiate in vivo. We conclude that these cells are likely to be the sought-after SLCs.c-kit ͉ leukemia inhibitory factor ͉ platelet-derived growth factor receptor ␣ ͉ puberty ͉ steroidogenesis L eydig cells (LCs) are the primary source of testosterone in the male, and their differentiation in the testes during puberty is a signature event in the development of the male body plan. It is hypothesized, but far from proven, that LCs first arise from undifferentiated stem cells [stem LCs (SLCs)] (1-3). It has been suggested that, in rats, the putative SLCs are present in the testis at birth, and that by 11 days postpartum, at least some of their progeny express LC-specific genes and thus become committed to the LC lineage (4, 5).The committed cells subsequently undergo phased transitions through progenitor and immature stages and ultimately to terminally differentiated adult LC stage (6). In particular, progenitor LCs (PLCs) form during days 12-28 postpartum (presumably from SLCs). The PLCs proliferate and also exhibit some aspects of differentiated function, including 3-hydroxysteroid dehydrogenase (3HSD) activity (7). Luteinizing hormone (LH) receptors (LHRs) first appear as the PLCs differentiate, suggesting that SLCs are likely to be independent of LH control (8). The development of the steroidogenic capacity of PLCs requires stimulation by LH (9). The mitotic activity of PLCs gradually is reduced, and the cells enlarge...