The inability of the fetal and immature Leydig cell to be desensitized by gonadotropin treatment, a characteristic of the adult cell, is attributed to the absence of an estrogen-mediated regulation of the androgen pathway. Cultures of fetal rat Leydig cells were employed to analyze this differential response. The fetal rat Leydig cells revealed low aromatization capacity, undetectable estradiol production, a low level of estrogen receptors, and a minimally detectable level of an estradiol-regulated protein. However, exogenous estradiol caused up-regulation of its own receptor, increase of an estradiol-regulated protein, and induction of a steroidogenic lesion at the microsomal level, resulting in decreased androgen production. This estrogen-mediated enzymatic inhibition resembles that observed in gonadotropin-desensitized adult Leydig cells. The absence of this regulation in fetal life is likely due to insufficient aromatase activity, with lack of consequent receptor-mediated estrogen action. The cultured fetal Leydig cell provides a useful model to elucidate the molecular mechanism involved in the development of estradiol-mediated desensitization.