Each Sertoli cell can support a finite number of developing germ cells. During development of the testis, the cessation of Sertoli cell proliferation and the onset of differentiation determine the final number of Sertoli cells and, hence, the number of sperm that can be produced. We hypothesize that the transition from proliferation to differentiation is facilitated by E-box transcription factors that induce the expression of differentiation-promoting genes. The relative activities of E-box proteins were studied in primary Sertoli cells isolated from 5-, 11-, and 20-day-old rats, representing proliferating, differentiating, and differentiated cells, respectively. E-box DNA-binding activity is almost undetectable 5 days after birth but peaks with initiation of differentiation 11 days after birth and remains elevated. Upstream stimulatory factors 1 and 2 (USF1 and USF2) were found to be the predominant E-box proteins present within DNA-protein complexes formed after incubating E-box-containing probes with nuclear extracts from developing Sertoli cells. The known potentiator of Sertoli cell differentiation, thyroxine, increases USF DNA-binding activity in Sertoli cells before differentiation (5-day-old Sertoli cells) but not after differentiation is initiated (11- and 20-day-old Sertoli cells). The developmental-specific increase in USF1 and USF2 DNA-binding activity may facilitate the switch from proliferation to differentiation and, thus, determine the ultimate number of Sertoli cells present within the testes and the upper limit of fertility.