Scientists have created immature sperm cells in a laboratory dish and injected them into eggs to produce mouse offspring.
The Chinese researchers say their stem cell technique could pave the way for new treatments for male infertility.
British experts have called for the results to be independently verified and pointed out that any practical application is likely to be a long way off.
The mouse cells produced were technically “spermatids” – undeveloped sperm that lack tails and cannot swim.
Yet when they were injected into mouse eggs, mimicking a common IVF technique called Icsi (intracytoplasmic sperm injection), they delivered viable embryos and healthy, fertile babies.
In the UK, using spermatids in the same way to produce a pregnancy would be illegal.
Dr Jiahao Sha, from Nanjing Medical University who co-led the research, which was reported in the peer-reviewed journal Cell Stem Cell, said: “If proven to be safe and effective in humans, our platform could potentially generate fully functional sperm for artificial insemination or in-vitro fertilisation techniques.
“Because currently available treatments do not work for many couples, we hope that our approach could substantially improve success rates for male infertility.”
The scientists began with stem cells taken from mouse embryos which were exposed to a carefully mixed cocktail of chemicals. This triggered their transformation into primordial germ cells, the first step on the developmental path to becoming sperm.
Next, the germ cells were exposed to testicular cells and testosterone in an attempt to mimic the natural environment of the testes.
When the resulting spermatids were injected into mouse eggs, they proved capable of producing embryos that developed normally.
Infertility affects around 15% of couples and can be traced to the man in about a third of cases.
A major cause of male infertility is the failure of pre-cursor cells in the testes to undergo a special type of cell division called meiosis.
In 2014, a team of distinguished reproductive biologists writing in the journal Cell proposed a set of “gold standard” criteria to prove that all the essential steps of meiosis have taken place in artificially created eggs or sperm.
They included showing evidence of correct DNA content in the cell nucleus at specific meiotic stages, normal chromosome number and organisation, and the ability of the engineered cells to produce viable offspring.
The Chinese team claims to have passed all these tests.
Scientists in the UK praised the “mammoth” achievement of their Chinese colleagues – but said there were still many obstacles to be overcome before sperm-like cells grown in the laboratory could be of use to infertile men.
Professor Richard Sharpe, from the Medical Research Council Centre for Reproductive Health at the University of Edinburgh, said safety was a major issue.
“Bear in mind that if germ cells do not format their DNA correctly, it may not only affect the resulting individual but might also affect the next generation,” he warned.
Allan Pacey, Professor of Andrology at the University of Sheffield, said the study was an “interesting step forward”, but added: “In spite of these encouraging results, we are still some way from immediately applying this technique as a potential cure for human male infertility.
“It remains to be seen if this technique could be applied in humans to create sperm-like cells that might be useable in IVF.”
But Professor Chris Barratt, from the University of Dundee, called the study a “landmark”.
He added: “Importantly, although the efficiency of the process remains to be improved, the authors (using Icsi) achieve live births that are themselves fertile.
“Whilst human work is some way off, it is closer than we think.”