Organ culture systems enabling in vitro spermatogenesis from neonatal mouse testes exist, but differentiation from fetal testes shortly after sex determination remains unsuccessful. Here, we report the in vitro generation of fertile haploid cells from E12.5 fetal testes. While optimizing in vitro spermatogenesis protocols for neonatal testes, we find that supplementing the culture medium with reverse transcriptase inhibitors (RTIs) significantly improves the efficiency of spermatogenesis, by suppressing retrotransposon activity and protecting genomic integrity. Applying this approach, we successfully induce spermatogenesis through to the elongating spermatid by culturing E12.5 fetal testes under hypoxic conditions in RTI-supplemented medium. Notably, microinsemination using in vitro-derived spermatids produces healthy and fertile offspring, confirming their functional competence. These findings demonstrate the faithful in vitro recapitulation of testicular development and complete spermatogenesis from an early fetal stage, providing a valuable platform for investigating early germ cell development and reproductive biology.