We have derived and characterized single cell clones from a xenograft tumor of the teratocarcinoma cell line Tera-2. Isozyme and chromosomal analyses confirmed their common origin. When cultures of the clones were maintained at a high cell density, many cells exhibited a morphology and cell surface antigen phenotype typical of human embryonal carcinoma cells. These features included a high nucleo-cytoplasmic ratio, prominent nucleoli, and the expression of the globoseries glycolipid antigen SSEA-3. In addition, other cells, in many respects resembling these typical embryonal carcinoma cells, were distinguished by a marked tendency to accumulate cytoplasmic glycogen. Similar cells, together with more differentiated cells, were seen in low passage cultures of Tera-2 itself. When the clones were grown at a low cell density many cells assumed a larger, flatter shape, a few with multiple nucleoli. Also, the fucosylated lactosamine antigen SSEA-1 appeared on some cells, whereas expression of SSEA-3 and HLA-A,B,C tended to be reduced. Often the synthesis of fibronectin was increased. However, no obvious cytoplasmic differentiation was seen upon ultrastructural examination, and synthesis of human chorionic gonadotropin, alpha-fetoprotein, and laminin was not detected. In contrast to the limited spontaneous changes seen in culture, marked differentiation occurred in tumors obtained following injection of the cells into athymic (nu/nu) mice. In additional to embryonal carcinoma cells, these tumors contained a variety of somatic tissues that included glandular structures, possibly related to the primitive gut, and neural elements. These cell lines derived from Tera-2 constitute the first example of clonal human embryonal carcinoma cells, adapted to growth in vitro, that have retained the capacity for differentiation into diverse somatic tissues.