The aim of this study was to determine the cellular and molecular mechanisms of prolactin (PRL) in testicular development of prepubertal cockerels. In an in vivo animal experiment, active immunization against PRL severely depressed prepubertal testicular development by significantly reducing testicular weights at both 122 and 164 d of age. The number of elongated spermatids in the seminiferous tubules was also significantly decreased by immunization with 199-residue chicken PRL (cPRL) at age 122 d. Inhibition of testicular development by cPRL immunization was associated with decreases in LH receptor (LHR), FSH receptor (FSHR), Stat5b, P450scc, steroidogenic acute regulatory (StAR) protein, and 3β-hydroxysteroid dehydrogenase (3β-HSD) mRNA expression levels in testicular tissue. In in vitro experiments, testosterone production by cultured Leydig cells isolated from prepubertal cockerel testes was dose-dependently enhanced by treatment with bioactive recombinant PRL, but a lesser response was seen with high concentrations of PRL. The distinct changes in testosterone production in response to high and low concentrations of added PRL were paralleled by similar patterns of change in the mRNA levels of Stat5b, LHR, P450scc, StAR, 3β-HSD, and CYP17A1 in cultured Leydig cells, as well as protein amounts of phosphorylated Jak2 and Stat5a/b. In conclusion, low to medium doses of PRL potentiate testis development in prepubertal cockerels by enhancing testosterone secretion from Leydig cells via activation of PRLR/Stat5b signal transduction, which upregulates mRNA expression of LHR and testosterone synthesizing enzymes. However, this positive regulation was weaker in response to a high dose of PRL, which reduced PRLR/Stat5b signal transduction and the expression of genes involved in LH signaling and testosterone synthesis.