Dax1 is an orphan nuclear receptor expressed in both Leydig and Sertoli cells of the testis. Mutation of DAX1 in humans causes adrenal failure and hypogonadotropic hypogonadism. Targeted mutagenesis of Dax1 in mice reveals a primary gonadal defect characterized by overexpression of aromatase and cellular obstruction of the seminiferous tubules and efferent ductules, leading to germ cell death and infertility. Transgenic expression of DAX1 under the control of the müllerian-inhibiting substance promoter, which is selectively expressed in Sertoli cells, improves fertility but does not fully correct the histological abnormalities in the testes of Dax1 knockout (Dax1KO) mice. We therefore hypothesized that Dax1 may also play a crucial role in other somatic cells of the testis, namely the Leydig cells. A 2.1-kilobase fragment of the murine LH receptor 5′-promoter (LHR-DAX1) was used to generate transgenic mice that selectively express DAX1 in Leydig cells. Expression of the LHR-DAX1 transgene caused no observable phenotype in wild-type mice but improved fertility when expressed in Dax1KO males (rescue [RS]). Although testicular size was not increased in LHR-DAX1 RS animals, aromatase expression was restored to normal levels, and sperm production was increased. Testicular pathology was only slightly improved in RS mice compared to Dax1KO animals. Taken together with the result of previous studies of DAX1 expression in Sertoli cells, we conclude that the testis phenotype of Dax1KO mice reflects the combined effects of Dax1 deficiency in both Sertoli and Leydig cells.