A spontaneous mutation leading to the formation of congenital ovarian and testicular tumors was detected in the WKY/Ztm rat strain. The histological evaluation revealed derivatives from all three germ layers, thereby identifying these tumors as teratomas. Teratocarcinogenesis was accompanied by infertility and the underlying mutation was termed ter. Linkage analysis of 58 (WKY-terxSPRD-Cu3) F2 rats associated the ter mutation with RNO18 (LOD = 3.25). Sequencing of candidate genes detected a point mutation in exon 4 of the dead-end homolog 1 gene (Dnd1), which introduces a premature stop codon assumed to cause a truncation of the Dnd1 protein. Genotyping of the recessive ter mutation revealed a complete penetrance of teratocarcinogenesis and infertility in homozygous ter rats of both genders. Morphologically non-tumorous testes of homozygous ter males were reduced in both size and weight. This testicular malformation was linked to a lack of spermatogenesis using immunohistochemical and histological staining. Our WKY-Dnd1(ter)/Ztm rat is a novel animal model to investigate gonadal teratocarcinogenesis and the molecular mechanisms involved in germ cell development of both genders.