The main objective of the study was to investigate the effects of hyperthyroidism on the rat testis interstitium during prepuberty, which is not well understood at present. Male Sprague Dawley rats were injected subcutaneously daily with saline (controls) or tri-iodothyronine (T3, 50 μg/kg body weight; hyperthyroids) from postnatal Day 1. Rats were killed at Days 5, 7, 9, 12, 16, and 21. One testis of each rat was used to determine LH-stimulated (100 ng/ml) testicular androgen secretory capacity in vitro. The other testis was used either for morphometric studies (n = 5) or for immunolocalization of 3β-hydroxysteroid dehydrogenase (3β-HSD) to identify steroidogenic cells (n = 3) and 11β-hydroxysteroid dehydrogenase 1 (11β-HSD1) to differentially identify adult Leydig cells. Daily T3 injections resulted in significant reductions in body and testis weights. Morphometric analysis revealed that lower testis weights in rats treated with T3 were mainly the result of reductions of total volume of seminiferous cords/tubules. The number of interstitial mesenchymal cells (MCs) was lower (P < 0.05) in T3 rats compared with age-matched controls. The number of fetal Leydig cells (FLCs) was not different between the two groups; however, FLC hypotrophy was detected in T3 rats at Day 16 in contrast to Day 21 in control rats. In both groups, morphologically identifiable adult Leydig cells (ALCs) were observed at Day 12 and thereafter; however, the ALC number per testis in T3 rats was twice as much as those of controls. Positive immunolabeling for 3β-HSD was first detected in MC/progenitor cells on Day 9 in rats in the T3 group (cells were still spindle-shaped) and on Day 12 in rats in the control group. Testicular testosterone production in vitro was lower (P < 0.05) in T3 rats compared with controls at each age tested and further reductions (<0.05) were observed in T3 rats at Days 16 and 21. Testicular androstenedione production was also lower (P < 0.05) in T3 rats at Days 5 and 7, but increased (P < 0.05) thereafter, than in control rats. These findings support that there are more newly formed ALCs in T3 testes than in those of controls. Moreover, these results demonstrate that hyperthyroidism stimulates premature hypotrophy of FLCs and early differentiation of increased numbers of MCs to ALCs in the prepubertal rat testis, further supporting the view that thyroid hormone has a regulatory role in initiating MC differentiation into ALCs in the prepubertal rat testis.