Sry on the Y chromosome is the master switch of sex determination in mammals. It has been well established that Sry encodes a transcription factor that is transiently expressed in somatic cells of the male gonad, leading to the formation of testes. In the testis of adult mice, Sry is expressed as a circular RNA (circRNA) transcript. However, the physiological function of Sry circRNA (circSRY) remains unknown since its discovery in 1993. Here we show that circSRY is mainly expressed in the spermatocytes, but not in mature sperm or somatic cells of the testis. Loss of circSRY led to germ cell apoptosis and the reduction of sperm count in the epididymis. The level of γH2AX was decreased, and failure of XY body formation was noted in circSRY KO germ cells. Further study demonstrated that circSRY directly bound to miR-138-5p in spermatocytes, and in vitro assay suggested that circSRY regulates H2AX mRNA through sponging miR-138-5p. Our study demonstrates that, besides determining sex, Sry also plays an important role in spermatogenesis as a circRNA.