The teratocarcinoma-derived C1 clone behaves as a mesodermal tripotential progenitor cell whose choice of fate, either osteoblast, chondroblast, or adipoblast, is strictly dependent on the spatial organization of the cells and the nature of the induction. In the absence of cell contact before the addition of inducers, the C1 cells maintain a stable undifferentiated phenotype while expressing potential regulators of embryonic mesodermal stem cell fate such a M-twist and Id1. Upon establishment of cell contacts before the induction of differentiation, the early genes characteristic of the three fates become expressed. In the presence of beta glycerophosphate and ascorbate, provided the cells have formed aggregates, 95% of the C1 cells mineralize with a kinetics of gene expression close to that of osteoblasts (Poliard, A., D. Lamblin, P. J. Marie, M. H. Buc, and O. Kellerman. 1993. J. Cell Sci. 106:503-512). With 10(-6)M dexamethasone, 80% of the same aggregates differentiate into foci of chondroblast-like cells. The kinetics of expression of the genes encoding type II, IX, X, and XI collagens, aggrecan and link protein during the conversion toward cartilage hypertrophy resembles that accompanying in vivo chondrogenesis. The synergistic action of dexamethasone and insulin convert most confluent C1 cells into functional adipocytes and induce a pattern of gene expression close to that reported for adipoblast cell lines. The C1 clone with its capacity to differentiate along three alternative pathways with high frequency, therefore appears as a valid in vitro model for deciphering the molecular basis of mesoblast ontogeny.