BACKGROUND: Stem cells interact closely with their microenvironment or niche, and abnormalities in niche compromise the self-renewing tissue. In testis, for example, Sertoli cells interact with germ cells, and defects in Sertoli cells compromises spermatogenesis, leading to male infertility. However, it has not been possible to restore spermatogenesis from endogenous stem cells in infertile testis with environmental defects METHODS AND RESULTS: When healthy Sertoli cells from infertile white spotting (W) mouse were transplanted into the seminiferous tubules of infertile Steel (SI) mouse testis that had defective Sertoli cells, spermatogenesis occurred from SI stem cells in the recipient testis. On average, 1.1% of the recipient tubules showed spermatogenesis. Furthermore, in a microinsemination experiment with germ cells that developed in the testis, we obtained four normal offspring from 114 successfully injected oocytes. CONCLUSIONS: This study demonstrates that defects in male germline microenvironment can be corrected by Sertoli cell transplantation. Although further improvements are required to enhance the low efficiency of spermatogenesis, the ability to correct environmental defect by niche transplantation has important implications in developing new strategies for treating incurable disorders in self-renewing tissues.