Sertoli cells (SCs) are presumed to be the center of testis differentiation because they provide both structural support and biological regulation for spermatogenesis. Previous studies suggest that SCs control germ cell (GC) count and Leydig cell (LC) development in mouse testes. However, the regulatory role of SCs on peritubular myoid (PTM) cell fate in fetal testis has not been clearly reported. Here, we employed Amh‐Cre; diphtheria toxin fragment A (DTA) mouse model to selectively ablate SCs from embryonic day (E) 14.5. Results found that SC ablation in the fetal stage caused the disruption of testis cords and the massive loss of GCs. Furthermore, the number of α‐smooth muscle actin‐labeled PTM cells was gradually decreased from E14.5 and almost lost at E18.5 in SC ablation testis. Interestingly, some Ki67 and 3β‐HSD double‐positive fetal LCs could be observed in Amh‐Cre; DTA testes at E16.5 and E18.5. Consistent with this phenomenon, the messenger RNA levels of Hsd3b1, Cyp11a1, Lhr, Star and the protein levels of 3β‐HSD and P450Scc were significantly elevated by SC ablation. SC ablation appears to induce ectopic proliferation of fetal LCs although the total LC number appeared reduced. Together, these findings bring us a better understanding of SCs’ central role in fetal testis development.