Transplantation of spermatogonial stem cells into syngeneic or immunosuppressed recipient mice or rats can result in donor-derived spermatogenesis and fertility. Recently, this approach has been employed to introduce a transgene into the male germline. Germ-cell transplantation in species other than laboratory rodents, if successful, holds great promise as an alternative to the inefficient methods currently available to generate transgenic farm animals that can produce therapeutic proteins in their milk or provide organs for transplantation to humans. To explore whether germ-cell transplantation could result in donor-derived spermatogenesis and fertility in immunocompetent recipient goats, testis cells were transplanted from transgenic donor goats carrying a human alpha-1 antitrypsin expression construct to the testes of sexually immature wild-type recipient goats. After puberty, sperm carrying the donor-derived transgene were detected in the ejaculates of two out of five recipients. Mating of one recipient resulted in 15 offspring, one of which was transgenic for the donor-derived transgene. This is the first report of donor cell-derived sperm production and transmission of the donor haplotype to the next generation after germ-cell transplantation in a nonrodent species. Furthermore, these results indicate that successful germ-cell transplantation is feasible between immunocompetent, unrelated animals. In the future, transplantation of genetically modified germ cells may provide a more efficient alternative for production of transgenic domestic animals.