The cAMP response element modulator (CREM) gene encodes transcription factors that are highly expressed in spermatids. A deficiency of the CREM gene leads to male infertility in mice due to round spermatid maturation arrest. However, CREM is also expressed in testicular Sertoli cells. We investigated whether CREM deficiency affects the germ line alone or whether the testicular environment is also dependent on CREM function. We examined the restoration of donor-derived spermatogenesis in CREM-deficient testes after transfer of wild-type spermatogonia (16 animals) and after transplantation of germ cells from CREM-deficient or heterozygous donors into spermatogenic tubules of wild-type hosts (16 and 12 animals). Six wk after endogenous spermatogenesis had been depleted by busulphan treatment, spermatogonia were transferred via the rete testis. Production of donor-derived germ cells in the deficient recipients was confirmed by testicular histology and polymerase chain reaction (PCR) analysis of testis fragments 7 and 13 wk after germ cell transfer. Sperm with donor genotype, as detected by PCR, also were flushed from the epididymis. Germ cell transfer using heterozygous donors was also successful. CREM-deficient germ cells largely failed to colonize wild-type recipient testes. According to these findings, germ cell differentiation is dependent on CREM function. The testicular environment of CREM-deficient mice is not essentially affected and is able to support complete spermatogenesis in the presence of wild-type germ cells.