Microenvironments support the maintenance of stem cells and the growth of tumors through largely unknown mechanisms. While cell-autonomous chromatin modifications have emerged as important determinants for self-renewal and differentiation of stem cells, a role for non-cell autonomous epigenetic contributions is not well established. Here, we genetically ablated the chromatin modifier Swi-independent 3a (Sin3a) in fetal Sertoli cells, which partly comprise the niche for male germline stem cells, and investigated its impact on spermatogenic cell fate and teratoma formation in vivo. Sertoli cell-specific Sin3a deletion resulted in the formation of few undifferentiated spermatogonia after birth while initially maintaining spermatogenic differentiation. Stem cell-associated markers Plzf, Gfra1, and Oct4 were downregulated in the mutant fetal gonad, while Sertoli cell markers Steel and Gdnf, which support germ cells, were not diminished. Following birth, markers of differentiating spermatogonia, Kit and Sohlh2, exhibited normal levels, but chemokine-signaling molecules chemokine (C-X-C motif) ligand 12 (CXCL12)/stromal cell-derived factor 1 (SDF1) and chemokine (C-X-C motif) receptor 4 (CXCR4), expressed in Sertoli cells and germ cells, respectively, were not detected. In the juvenile, mutant testes exhibited a progressive loss of differentiating spermatogonia and a block in spermatid elongation, followed by extensive germ cell degeneration. Sertoli cell-specific Sin3a deletion also suppressed teratoma formation by fetal germ cells in an in vivo transplantation assay. We conclude that the epigenome of Sertoli cells influences the establishment of a niche for germline stem cells as well as for tumor initiating cells. STEM CELLS 2010;28:1424-1434.