The capacity to flexibly adapt responding to unexpected changes in the environment is crucial for survival. Several neurotransmitters have been implicated in stimulus-outcome reversal learning. Yet, it remains an open question whether inter-individual differences in the neuroactive hormone testosterone may also be related to this type of behavioral flexibility. In this study we assessed the association between endogenous testosterone level and reversal learning in young healthy men. We used an observer reversal learning task, in which subjects viewed computer-based decisions between two stimuli, of which one was currently rewarded while the other one was punished. Contingencies reversed unpredictably every 5–9 trials. Subjects had to indicate the current outcome association before the actual outcome was revealed. In the trial following an unexpected reversal either the same stimulus from the reversal (experienced reversal), or its alternative, for which the reversal had not yet been shown (inferred reversal), could be chosen by the computer, and subjects had to adapt responding accordingly. We found that testosterone predicted better post-reversal performance. This correlation was strongest in the more difficult inferred reversal condition, particularly in impulsive individuals. Collectively, these data support the view that endogenous testosterone may enhance behavioral flexibility in men, particularly when working memory demand is high and subjects have to update several stimulus-outcome contingencies at the same time. It remains to be further elucidated whether this testosterone effect was achieved through an interaction with dopaminergic transmission or through direct interplay with androgen receptors in the brain regions implicated in reversal learning.