We identified a novel gene of Drosophila melanogaster, Male-specific IDGF (MSI), encoding a transmembrane signaling molecule with exclusive expression in the testis. This molecule (MSI) contains a single transmembrane domain and has 35% amino acid identity with insect-derived growth factor (IDGF), a soluble growth factor for embryonic cells of the flesh fly, Sarcophaga peregrina. When MSI was exogenously expressed in Schneiders's line 2 cells, it was shown to be localized on the cell surface and exhibits growth factor activity, suggesting that MSI is a membrane-bound extracellular signaling molecule. Gene expression studies revealed that MSI mRNA was restricted to mature primary spermatocytes, whereas MSI was detected in the cells at the later developmental stages. Analysis using four meiotic arrest mutants, aly, can, mia, and sa suggested that MSI is involved in spermiogenesis, the final differentiation step of spermatogenesis. These results suggest that MSI is an extracellular signaling molecule participating in spermatogenesis and is a new member of the IDGF family.