The study in the International Journal of Andrology looked at men born between 1979 and 1987.
A UK expert said chemicals may affect the development of male babies.
Finnish men were studied as they have previously been shown to have some of the highest sperm counts in the world.
But scientists were never sure if this was because of their genetics or because they were exposed to fewer harmful chemicals.
The researchers looked at three groups of men who reached the age 19 between 1998 and 2006.
Men who were born in the late 1980s had lower sperm counts than those who were born in the beginning of the decade.
Total sperm counts were 227m for men born in 1979-81, 202m for those born in 1982-83 and 165m for men born in 1987, respectively.
In addition, the researchers observed that there was a higher incidence of testicular cancer in men born around 1980 compared with men born around 1950.
may be producing less sperm than their fathers and grandfathers did at the same age”
Dr Allan Pacey,University of Sheffield
Writing in the journal, the researchers led by Professor Jorma Toppari, said: “These simultaneous and rapidly occurring adverse trends suggest that the underlying causes are environmental and, as such, preventable.
“Our findings further necessitate the efforts to identify reasons for the adverse trends in reproductive health to make preventive measures possible.”
Dr Allan Pacey, senior lecturer in andrology at the University of Sheffield, said: “Scientists have been concerned for some time about the possibility that younger men may be producing less sperm than their fathers and grandfathers did at the same age.”
But he said methods used to measure sperm have changed significantly over time and have not always been reliable.
Dr Pacey said this study used “very robust laboratory methods”.
“The fact that sperm counts have dropped so quickly, and mirrors the increase in the incidence of testicular cancer in Finland, suggests that the effect is probably environmental.”
He added: “The best working theory we have to explain why sperm counts may be declining is that chemicals from food or the environment are affecting the development of testicles of boys in the womb or in their early years of life.
“However, the effect on their sperm production only becomes apparent when they pass through puberty and eventually try to become fathers.
“This inter-generational effect makes it difficult to study but it is clear that more research is needed to identify dangerous chemicals so that we can try remove them from the environment and protect future generations.