From BBC News:
Scientists have proved for the first time that sperm grown from embryonic stem cells can be used to produce offspring. The discovery in mice could ultimately help couples affected by male fertility problems to conceive. And by understanding embryo developmental processes better, a host of other diseases might be treated using stem cells, they say. The study is published in the journal Developmental Cell. The experiment was carried out using mice and produced seven babies, six of which lived to adulthood. However, the mice showed abnormal patterns of growth, and other problems, such as difficulty breathing.
Stem cells are special because they have the potential to develop into any tissue in the body. Professor Karim Nayernia and colleagues at the Georg-August University in Göttingen, Germany, took stem cells from a mouse embryo that was only a few days old and grew these cells in the laboratory. Using a specialised sorting instrument they were able to isolate some stem cells that had begun to develop as sperm.