Reduction of estradiol production and high serum concentrations of follicular stimulating hormone (FSH) are endocrine disorders associated with premature ovarian failure. Here, we report that transplantation of ovarian-like cells differentiated from stem cells restored endogenous serum estradiol levels. Stem cells were isolated from postnatal mouse skin and differentiated into ovarian-cell-like cells that are consistent with female germ, and ovarian follicle somatic cells. The ovarian-cell-like cells were transplanted into ovariectomized mice (Cell Trans), whereas control mice were subjected to bilateral ovariectomies without cell transplantation (OVX). Using vaginal cytology analysis, it was revealed that in 13 out of 19 Cell Trans mice, estrus cycles were restored around 8 weeks after cell transplantation and were maintained until 16 weeks post-transplantation, whereas in the OVX group, all mice were arrested at metestrus/diestrus of the estrus cycle. The uterine weight in the Cell Trans group was similar to sham operation mice (Sham OP), while severe uterine atrophy and a decreased uterine weight were observed in the OVX group. Histologically, ectopic follicle-like structures and blood vessels were found within and around the transplants. At 12-14 weeks after cell transplantation, mean serum estradiol level in Cell Trans mice (178.0±35 pg/mL) was comparable to that of the Sham OP group (188.9±29 pg/mL), whereas it was lower in the OVX group (59.0±4 pg/mL). Serum FSH concentration increased in the OVX group (1.62±0.32 ng/mL) compared with the Sham OP group (0.39±0.34 ng/mL). Cell Trans mice had a similar FSH level (0.94±0.23 ng/mL; P<0.05) to Sham OP mice. Our results suggest that ovarian somatic cells differentiated from stem cells are functional in vivo. In addition to providing insights into the function of ovarian somatic cells derived from stem cells, our study may offer potential therapeutic means for patients with hypo-estradiol levels like those encountered in premature ovarian failure.