A homozygous nonsense mutation (Ter) in murine Dnd1 (Dnd1(Ter/Ter)) results in a significant early loss of primordial germ cells (PGCs) prior to colonization of the gonad in both sexes and all genetic backgrounds tested. The same mutation also leads to testicular teratomas only on the 129Sv/J background. Male mutants on other genetic backgrounds ultimately lose all PGCs with no incidence of teratoma formation. It is not clear how these PGCs are lost or what factors directly control the strain-specific phenotype variation. To determine the mechanism underlying early PGC loss we crossed Dnd1(Ter/Ter) embryos to a Bax-null background and found that germ cells were partially rescued. Surprisingly, on a mixed genetic background, rescued male germ cells also generated fully developed teratomas at a high rate. Double-mutant females on a mixed background did not develop teratomas, but were fertile and produced viable off-spring. However, when Dnd1(Ter/Ter) XX germ cells developed in a testicular environment they gave rise to the same neoplastic clusters as mutant XY germ cells in a testis. We conclude that BAX-mediated apoptosis plays a role in early germ cell loss and protects from testicular teratoma formation on a mixed genetic background.