To assess adult stem cell differentiation in the testis, we injected bone marrow cells from adult green fluorescent protein (GFP) transgenic mice into the seminiferous tubules and the testicular interstitium of busulfan-treated wild-type or c-kit mutant (W/W(v)) mice. Ten to 12 weeks after transplantation, we examined the fate of the transplanted bone marrow cells and found that they survived in recipient testes. In both the busulfan-treated and W/W(v) mice, some of the GFP-positive donor cells had a Sertoli cell appearance and expressed follicle-stimulating hormone receptor within the seminiferous tubules. In addition, GFP-positive donor cells were found in the interstitium of recipient testes, and they expressed the cytochrome P450 side chain cleavage enzyme (P450scc). In the seminiferous tubules of busulfan-treated mice, GFP-positive donor cells had the appearance of spermatogonia or spermatocytes and expressed VASA. However, this was not found in the seminiferous tubules of W/W(v) mice. We conclude that adult bone marrow cells, in a favorable testicular environment, differentiate into somatic and germ cell lineages. The resident neighboring cells in the recipient testis may control site-appropriate stem cell differentiation. This clinically relevant finding raises the possibility for treatment of male infertility and testosterone deficiency through the therapeutic use of stem cells.