Germ cell development involves formation of the spermatogenic or oogenic lineages from the bipotential primordial germ cells. Whether germ cells enter the male or female developmental pathway is regulated through signaling mechanisms in the fetal testis and ovary respectively. These signaling processes underpin an important phase of germ cell development, disruption of which can lead to failed germ cell function and infertility or to formation of germ cell tumours. We developed a small molecule screening protocol to identify signaling pathways that direct male-specific germ cell development. After screening 15 inhibitors we provide evidence that testis development and entry of male germ cells into mitotic arrest is regulated through ACTIVIN and TGFb signaling. Inhibition of ACTIVIN and/or TGFb signaling results in entry of male germ cells into meiosis or prevents proper mitotic arrest of germ cells and appropriate activation of male specific differentiation pathways, depending on the timing of the blockage. Moreover, the earliest stages of testis development are disrupted through blocked testis cord formation. We demonstrate a significant decrease in Sertoli cell proliferation that presumably underlies restricted testis cord growth and disrupted cord formation. This model provides a model of compromised testis development and poor male germ cell differentiation that will help understand the molecular processes underlying male germ cell differentiation and formation of germ cell tumours. Moreover, this model may be of particular use in screening endocrine disruptors for their ability to disrupt testis and germ cell development, thereby providing insight into testicular dysgenesis and factors underlying poor male reproductive health.