An economical and simplified procedure to derive and propagate fully functional lines of undifferentiated rat spermatogonia in vitro is presented. The procedure is based on the formulation of a new spermatogonial culture medium termed SG medium. The SG medium is composed of a 1:1 mixture of Dulbecco modified Eagle medium:Ham F12 nutrient, 20 ng/ml of GDNF, 25 ng/ml of FGF2, 100 μM 2-mercaptoethanol, 6 mM l-glutamine, and a 1× concentration of B27 Supplement Minus Vitamin A solution. Using SG medium, six individual spermatogonial lines were derived from the testes of six separate Sprague-Dawley rats. After proliferating over a 120-day period in SG medium, stem cells within the spermatogonial cultures effectively regenerated spermatogenesis in testes of busulfan-treated recipient rats, which transmitted the donor cell haplotype to more than 75% of progeny by natural breeding. Subculturing in SG medium did not require protease treatment and was achieved by passaging the loosely bound spermatogonial cultures at 1:3 dilutions onto fresh monolayers of irradiated DR4 mouse fibroblasts every 12 days. Spermatogonial lines derived and propagated using SG medium were characterized as homogeneous populations of ZBTB16 DAZL cells endowed with spermatogonial stem cell potential.