ABSTRACT Previous studies have established that fetal Leydig cells (FLCs) and adult Leydig cells (ALCs) show distinct functional characteristics. However, the lineage relationship between FLCs and ALCs has not been clarified yet. Here, we reveal that a subset of FLCs dedifferentiate at fetal stages to give rise to ALCs at the pubertal stage. Moreover, the dedifferentiated cells contribute to the peritubular myoid cell and vascular pericyte populations in the neonatal testis, and these non-steroidogenic cells serve as potential ALC stem cells. We generated FLC lineage-specific Nr5a1 (Ad4BP/SF-1) gene-disrupted mice and mice lacking the fetal Leydig enhancer (FLE) of the Nr5a1 gene. Phenotypes of these mice support the conclusion that most of the ALCs arise from dedifferentiated FLCs, and that the FLE of the Nr5a1 gene is essential for both initial FLC differentiation and pubertal ALC redifferentiation.