We have investigated the effects of neonatal-prepubertal changes in thyroid hormone levels on the early phases of adult-type Leydig cell development in the rat testis. Hypothyroidism was induced by adding 6-propyl-2-thiouracil (PTU) to the drinking water, while hyperthyroidism was induced by daily injections with triiodothyronine (T3). The proliferative activity of the Leydig cells in PTU-treated animals was not different from that in age-matched controls through the age of 16 days. Nevertheless, the percentage of Leydig cells (i.e., the proportion of Leydig cells among the total interstitial cell population) was approximately 83% and 67% lower at the ages of 12 and 16 days, respectively. The proliferative activity of the Leydig cells in the T3-treated animals compared to the controls was increased approximately 3-fold at the ages of 12 and 16 days. The percentage of Leydig cells in T3-treated animals was also considerably increased at these two ages (400% and 725%, respectively). Concomitantly, the percentage of peritubular cells was decreased, suggesting that the increase in the percentage of Leydig cells may at least partially be the result of differentiation of peritubularly located precursor cells. Plasma testosterone levels fluctuated considerably at these ages. Hence, injection of T3 during the neonatal-prepubertal period not only affects Sertoli cell proliferation and differentiation but also directly or indirectly affects the onset of the formation of the adult-type Leydig cell population and its function.