The present study was conducted to evaluate the development of spermatogenesis and utility of using electroporation to stably transfect germ cells with the β-galactosidase gene in neonatal bovine testicular tissue ectopically xenografted onto the backs of recipient nude mice. Bull testicular tissue from 4-wk donor calves, which contains a germ cell population consisting solely of gonocytes or undifferentiated spermatogonia, was grafted onto the backs of castrated adult recipient nude mice. Testicular grafts significantly increased in weight throughout the grafting period and the timing of germ cell differentiation in grafted tissue was consistent with postnatal testis development in vivo relative to the bull. Seminiferous tubule diameter also significantly increased with advancing time after grafting. At 1 wk after grafting, gonocytes in the seminiferous cords completed migration to the basement membrane and differentiated germ cell types could be observed 24 wk after grafting. The presence of elongating spermatids at 24 wk confirmed that germ cell differentiation occurred in the bovine tissue. Leydig cells in the grafted bovine tissue were also capable of producing testosterone in the castrated recipient mice from 4 wk to 24 wk after grafting at concentrations that were similar to levels in intact, nongrafted control mice. The testicular tissue that had been electroporated with a β-galactosidase expression vector showed tubule-specific transgene expression 24 wk after grafting. Histological analysis showed that transgene expression was present in both Sertoli and differentiated germ cells but not in interstitial cells. The system reported here has the potential to be used for generation of transgenic bovine spermatozoa.