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The molecular control of self-renewal and differentiation of stem cells has remained enigmatic. Transgenic loss-of-function and overexpression models now show that the dosage of glial cell line–derived neurotrophic factor (GDNF), produced by Sertoli cells, regulates cell fate decisions of undifferentiated spermatogonial cells that include the stem cells for spermatogenesis. Gene-targeted mice with one GDNF-null allele show depletion of stem cell reserves, whereas mice overexpressing GDNF show accumulation of undifferentiated spermatogonia. They are unable to respond properly to differentiation signals and undergo apoptosis upon retinoic acid treatment. Nonmetastatic testicular tumors are regularly formed in older GDNF-overexpressing mice. Thus, GDNF contributes to paracrine regulation of spermatogonial self-renewal and differentiation.