The immortal human keratinocyte line HaCaT is frequently used as a paradigm for skin keratinocytes in vitro because of its highly preserved differentiation capacity. HaCaT cells form a nearly regular epidermal architecture when transplanted onto subcutaneous tissue of athymic mice. In order to analyze further their differentiation capacity in vitro, HaCaT cells were studied in organotypic cocultures on top of collagen gels containing human dermal fibroblasts. Within 1 wk HaCaT cells formed a still dysplastic epithelium, the thickness of which correlated with the number of fibroblasts in the collagen gel. With further culture time of up to 3 wk a remarkably well structured and differentiated squamous epithelium developed. After 1 wk, keratins 10 and 16, involucrin, and transglutaminase I were expressed in suprabasal layers, whereas filaggrin, keratin 2e, and loricrin appeared after 2-3 wk. Within this time, a nearly complete basement membrane had formed including hemidesmosomes and anchoring fibrils. Epithelial cell proliferation became restricted to the basal layer after 2 and 3 wk. Using the TdT-mediated dUTP nick end labeling assay, fragmentation of DNA was detectable in nuclei of the parakeratotic stratum corneum. Ultrastructurally, many features of keratinization accumulated after 2 and 3 wk, though an orthokeratotic keratinization was not achieved, in contrast to HaCaT transplants. This differentiation deficiency - as compared with normal keratinocytes -- might be due to a lack of paracrine factors important for keratinocyte differentiation or to a reduced sensitivity of these cells. Nevertheless, this high degree of differentiation under organotypic conditions qualifies this cell line as an appropriate model for elucidation of the molecular mechanisms regulating keratinocyte growth and differentiation and for use in pharmacotoxicology.