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Spontaneous testicular teratomas (STTs) are tumours comprising a diverse array of cell and tissue types, which are derived from pluripotent stem-like cells called embryonal carcinoma cells (ECCs). Although mouse ECCs originate from primordial germ cells (PGCs) in embryonic testes, the molecular basis underlying ECC development remains unclear. This study shows that the conditional deletion of mouse Dead end1 (Dnd1) from migrating PGCs leads to STT development. In Dnd1-conditional knockout (Dnd1-cKO) embryos, PGCs colonise the embryonic testes but fail to undergo sexual differentiation; subsequently, ECCs develop from a portion of the PGCs. Transcriptomic analyses reveal that PGCs not only fail to undergo sexual differentiation but are also prone to transformation into ECCs by upregulating the expression of marker genes for primed pluripotency in the testes of Dnd1-cKO embryos. Thus, our results clarify the role of Dnd1 in developing STTs and developmental process of ECC from PGC, providing novel insights into pathogenic mechanisms of STTs.