Frasier syndrome (FS) is characterized by chronic renal failure in early adulthood, varying degrees of gonadal dysgenesis, and a high risk for gonadal germ cell malignancies, particularly gonadoblastoma. Although it is known to arise from heterozygous splice mutations in intron 9 of the Wilms' tumor gene 1 (WT1), the mechanisms by which these mutations result in gonadal dysgenesis in humans remain obscure. Here we show that a decrease in WT1 + KTS isoforms due to disruption of alternative splicing of the WT1 gene in a FS patient is associated with diminished expression of the transcription factors SRY and SOX9 in Sertoli cells. These findings provide the first confirmation in humans of the results obtained by others in mice. Consequently, Sertoli cells fail to form the specialized environment within the seminiferous tubules that normally houses developing germ cells. Thus, germ cells are unable to fully mature and are blocked at the spermatogonial-spermatocyte stage. Concomitantly, subpopulations of the malignant counterpart of primordial germ cells/gonocytes, the intratubular germ cell neoplasia unclassified type (ITGCN), are identified. Furthermore, dysregulated Leydig cells produce insufficient levels of testosterone, resulting in hypospadias. Collectively, the impaired spermatogenesis, hypospadias and ITGCN comprise part of the developmental disorder known as 'testicular dysgenesis syndrome' (TDS), which arises during early fetal life. The data presented here show that critical levels of WT1 + KTS, SRY and SOX9 are required for normal Sertoli cell maturation, and subsequent normal spermatogenesis. To further study the function of human Sertoli cells in the future, we have established a human cell line.