Leydig cells synthesize and secrete testosterone, and are regulated by Sertoli cells. These two cell types may work together to regulate testicular androgen production. Studies have shown that Leydig cell androgen synthesis can be dramatically enhanced by Sertoli cells in the presence of melatonin, which can regulate the secretory function of Leydig and Sertoli cells. However, the molecular mechanism of melatonin-regulated Leydig cell androgen production via Sertoli cells remains unclear. Here, we found that 10^−7 M melatonin increased testosterone production in co-cultured Leydig and Sertoli cells isolated from sheep. Melatonin increased the expression of stem cell factor and insulin-like growth factor-1 and decreased estrogen synthesis in Sertoli cells. Melatonin promoted insulin-like growth factor-1 and decreased estrogen content via the membrane melatonin receptor 1. It also enhanced stem cell factor expression via the retinoic acid receptor-related orphan receptor alpha. Addition of PD98059, a MEK inhibitor, to Sertoli cell culture demonstrated that the melatonin upregulation of insulin-like growth factor-1 and downregulation of estrogen may be through the MEK/extracellular signal-regulated kinase pathway. Together, these results suggest that melatonin may function through modulating melatonin receptor 1-regulated insulin-like growth factor-1 expression, as well as melatonin receptor 1-induced suppression of estrogen synthesis to increase androgen production in co-cultured Leydig and Sertoli cells.