DAX1 is an orphan member of the nuclear hormone receptor superfamily of transcription factors. Our recent characterization of Dax1 (Ahch)-deficient male mice revealed a primary testicular defect resulting in hypogonadism and sterility. The progressive degeneration of the germinal epithelium, independent of abnormal gonadotropin and testosterone production, suggested an intrinsic loss of Dax1 function in the Sertoli cells. To test this hypothesis, we assessed the effect of Sertoli cell-specific expression of a human DAX1 (AHC) transgene driven using the promoter of the Müllerian inhibiting substance (MIS) gene. The MIS-DAX1 transgene partially rescued the mutant phenotype of the Dax1-deficient male mice. Although testicular morphology remained abnormal, fertility was restored to levels matching that of wild-type littermates. Examination of several markers of sperm fertilizing capability revealed significant improvements in MIS-DAX1-rescued mice. Epididymal sperm count and sperm motility were greater in 12-week-old rescued mice than in age-matched Dax1-deficient mice. The ability of sperm to undergo an immediate acrosome reaction was impaired in Dax1-deficient animals, and sperm from Dax1-deficient mice fertilized only 8.2 +/- 6.8% of eggs in vitro, significantly less than rescue (67.8 +/- 19.1%) and wild-type (88.9 +/- 3.9%) sperm. These results indicate that Dax1 expression in Sertoli cells is adequate to overcome crucial thresholds related to sperm production and function. However, the failure to completely rescue the testicular pathology of Dax1-deficient mice suggests that Dax1 expression in other somatic cells is essential for normal testicular development.