Infertility affects 13-18% of couples and growing evidence from clinical and epidemiological studies suggests an increasing incidence of male reproductive problems. There is a male factor involved in up to half of all infertile couples. The pathogenesis of male infertility can be reflected by defective spermatogenesis due to failure in germ cell proliferation and differentiation. We report here in vitro generation of a germ cell line (SSC1) from the pluripotent teratocarcinoma cells by a novel promoter-based sequential selection strategy and show that the SSC1 cell line form mature seminiferous tubule structures, and support spermatogenesis after transplantation into recipient testes. To select differentiated germ cell population, we generated a fusion construct (Stra8-EGFP) harbouring the 1.4 kb promoter region of germ line specific gene Stra8 and coding region of enhanced green fluorescence protein. This region was sufficient to direct gene expression to the germinal stem cells in testis of transgenic mice. The purified cells expressed the known molecular markers of spermatogonia Rbm, cyclin A2, Tex18, Stra8 and Dazl and the beta1- and alpha6-integrins characteristic of the stem cell fraction. This cell line undergoes meiosis and can develop into sperm when transplanted into germ cell depleted testicular tubules. Sperm were viable and functional, as shown by fertilization after intra-cytoplasmic injection into mouse oocytes. This approach provides the basis that is essential for studying the development and differentiation of male germ line stem cell, as well as for developing new approaches to reproductive engineering and infertility treatment.