Chicken Ovalbumin Upstream Promoter-Transcription Factor II (COUP-TFII; also known as NR2F2), is an orphan nuclear receptor of the steroid/thyroid hormone receptor superfamily. COUP-TFII-null mice die during the early embryonic development due to angiogenesis and cardiovascular defects. To circumvent the early embryonic lethality and investigate the physiological function of COUP-TFII, we knocked out COUP-TFII gene in a time-specific manner by using a tamoxifen inducible Cre recombinase. The ablation of COUP-TFII during pre-pubertal stages of male development results in infertility, hypogonadism and spermatogenetic arrest. Homozygous adult male mutants are defective in testosterone synthesis, and administration of testosterone could largely rescue the mutant defects. Notably, the rescued results also provide the evidence that the major function of adult Leydig cell is to synthesize testosterone. Further phenotypic analysis reveals that Leydig cell differentiation is arrested at the progenitor cell stage in the testes of null mice. The failure of testosterone to resumption of Leydig cell maturation in the null mice indicates that COUP-TFII itself is essential for this process. In addition, we identify that COUP-TFII plays roles in progenitor Leydig cell formation and early testis organogenesis, as demonstrated by the ablation of COUP-TFII at E18.5. On the other hand, when COUP-TFII is deleted in the adult stage after Leydig cells are well differentiated, there are no obvious defects in reproduction and Leydig cell function. Taken together, these results indicate that COUP-TFII plays a major role in differentiation, but not the maintenance of Leydig cells.