Testicular tumors in humans are reported to be significantly increasing in incidence. Embryo exposure to environmental estrogens has been proposed as one of the possible underlying causes. In mice, genetic, immunological, and experimental evidence suggest that germ cell testicular tumors may derive from primordial germ cells (PGCs), the embryonic precursors of gametes. Here we show that relatively high concentrations of estrogens stimulate mouse PGC growth in vitro through the somatic cells of the gonadal ridges. Moreover, we found that estrogens stimulate the transcription of the Steel gene and the production of c-Kit ligand in gonadal somatic cells, and that this growth factor is likely to be responsible for the observed stimulation of PGC growth via an Akt/PTEN pathway. Finally, we show that estrogen stimulation of gonadal somatic cells in culture, in combination with PTEN down-regulation in PGCs and the presence of leukemia inhibitory factor in the culture medium, result in high frequency of PGC transformation in tumorigenic cells. Based on these results, we present a novel experimental in vitro model for tumorigenic germ cell transformation and identify molecular pathways likely involved in development of germ cell tumors after estrogen exposure.