Previous reports and the current study have found that germ cell precursor cells appear in embryoid bodies (EBs) formed from mouse embryonic stem cells as identified by positive expression of specific germ cell markers such as Oct-3/4, Mvh, c-kit, Stella, and DAZL. We hypothesized that if exposed to appropriate growth factors, the germ cell precursor cells within the EBs would differentiate into gametes. The source for growth factors used in the present study is conditioned medium collected from testicular cell cultures prepared from the testes of newborn males. Testes at this stage of development contain most growth factors required for the transformation of germ stem cells into differentiated gametes. When EBs were cultured in the conditioned medium, they developed into ovarian structures, which contained putative oocytes. The oocytes were surrounded by one to two layers of flattened cells and did not have a visible zona pellucida. However, oocyte-specific markers such as Fig-alpha and ZP3 were found expressed by the ovarian structures. The production of oocytes using this method is repeatable and reliable and may be applicable to other mammalian species, including the human.