Recent studies have reported that induced pluripotent stem (iPS) cells from mice and humans can differentiate into primordial germ cells. However, whether iPS cells are capable of producing male germ cells is not known. The objective of this study was to investigate the differentiation potential of mouse iPS cells into spermatogonial stem cells and late-stage male germ cells. We used an approach that combines in vitro differentiation and in vivo transplantation. Embryoid bodies (EBs) were obtained from iPS cells using leukaemia inhibitor factor (LIF)-free medium. Quantitative PCR revealed a decrease in Oct4 expression and an increase in Stra8 and Vasa mRNA in the EBs derived from iPS cells. iPS cell-derived EBs were induced by retinoic acid to differentiate into spermatogonial stem cells (SSCs), as evidenced by their expression of VASA, as well as CDH1 and GFRα1, which are markers of SSCs. Furthermore, these germ cells derived from iPS cells were transplanted into recipient testes of mice that had been pre-treated with busulfan. Notably, iPS cell-derived SSCs were able to differentiate into male germ cells ranging from spermatogonia to round spermatids, as shown by VASA and SCP3 expression. This study demonstrates that iPS cells have the potential to differentiate into late-stage male germ cells. The derivation of male germ cells from iPS cells has potential applications in the treatment of male infertility and provides a model for uncovering the molecular mechanisms underlying male germ cell development.