Abstract Five main cell types are present in the Leydig cell lineage, namely the mesenchymal precursor cells, progenitor cells, newly formed adult Leydig cells, immature Leydig cells, and mature Leydig cells. Peritubular mesenchymal cells are the precursors to Leydig cells at the onset of Leydig cell differentiation in the prepubertal rat as well as in the adult rat during repopulation of the testis interstitium after ethane dimethane sulfonate (EDS) treatment. Leydig cell differentiation cannot be viewed as a simple process with two distinct phases as previously reported, simply because precursor cell differentiation and Leydig cell mitosis occur concurrently. During development, mesenchymal and Leydig cell numbers increase linearly with an approximate ratio of 1:2, respectively. The onset of precursor cell differentiation into progenitor cells is independent of LH; however, LH is essential for the later stages in the Leydig cell lineage to induce cell proliferation, hypertrophy, and establish the full organelle complement required for the steroidogenic function. Testosterone and estrogen are inhibitory to the onset of precursor cell differentiation, and these hormones produced by the mature Leydig cells may be of importance to inhibit further differentiation of precursor cells to Leydig cells in the adult testis to maintain a constant number of Leydig cells. Once the progenitor cells are formed, androgens are essential for the progenitor cells to differentiate into mature adult Leydig cells. Although early studies have suggested that FSH is required for the differentiation of Leydig cells, more recent studies have shown that FSH is not required in this process. Anti-Müllerian hormone has been suggested as a negative regulator in Leydig cell differentiation, and this concept needs to be further explored to confirm its validity. Insulin-like growth factor I (IGF-I) induces proliferation of immature Leydig cells and is associated with the promotion of the maturation of the immature Leydig cells into mature adult Leydig cells. Transforming growth factor α (TGFα) is a mitogen for mesenchymal precursor cells. Moreover, both TGFα and TGFβ (to a lesser extent than TGFα) stimulate mitosis in Leydig cells in the presence of LH (or hCG). Platelet-derived growth factor-A is an essential factor for the differentiation of adult Leydig cells; however, details of its participation are still not known. Some cytokines secreted by the testicular macrophages are mitogenic to Leydig cells. Moreover, retarded or absence of Leydig cell development has been observed in experimental models with impaired macrophage function. Thyroid hormone is critical to trigger the onset of mesenchymal precursor cell differentiation into Leydig progenitor cells, proliferation of mesenchymal precursors, acceleration of the differentiation of mesenchymal cells into Leydig cell progenitors, and enhance the proliferation of newly formed Leydig cells in the neonatal and EDS-treated adult rat testes.