It is well established that the c-kit gene plays an essential role in the proliferation of differentiating spermatogonia in prepuberal mice. However, the mechanisms that regulate the onset of spermatogenesis, i.e. differentiation of spermatogonial stem cells and c-kit expression, are poorly understood. Here we identify a novel signal transduction system in mouse prepuberal testis regulating this developmental event, involving bone morphogenetic protein 4 (BMP4) and its transduction machinery. BMP4 is produced by Sertoli cells very early in the postnatal life and is successively down regulated in peri-puberal Sertoli cells. Its receptor Alk3 and the R-Smad Smad5 are specifically expressed both in proliferating primordial germ cells and in postnatal spermatogonia. BMP4 stimulation of cultured spermatogonia induces Smad4/5 nuclear translocation and the formation of a DNA-binding complex with the transcriptional coactivator p300/CBP. In vitro exposure of undifferentiated spermatogonia to BMP4 exerts both mitogenic and differentiative effects, inducing [3H]thymidine incorporation and Kit expression. As a result of the latter event, Kit-negative spermatogonia acquire sensitivity to Stem Cell Factor.