The mouse embryonic oesophagus is initially lined with a simple columnar epithelial layer which changes during the course of development to a stratified squamous tissue. To study the mechanism of this transition, we developed an in vitro model, based on oesophageal explants isolated from E11.5d mouse embryos, which fully recapitulates the normal in vivo development. In this system, the columnar epithelial markers cytokeratins 8 and 18 (K8, 18) were strongly expressed at the beginning of the culture period and decreased in the basal layer of the epithelium at around 5 days of culture. Expression of K8 + 18 persisted in the suprabasal layers of the stratified epithelium for several more days. In contrast, the stratified squamous epithelial marker cytokeratin 14 (K14) was absent at the beginning, and cells expressing it progressively appeared within the basal layer from day 5 to day 9 of culture. The two possible mechanisms for the change are (1) a direct conversion of columnar cells to the basal layer cells of the squamous epithelium; (2) an overgrowth of columnar by squamous cells. Our results show that the first mechanism is operative. Firstly, co-staining for K8 and K14 demonstrates that some cells express both markers during the transition period. Secondly, after electroporation of a construct containing the K14 promoter driving nuclear GFP into the epithelium of E15.5 oesophagus, some cells expressed both K8 and GFP. Thirdly, there is no preferential loss of the columnar cells by apoptosis. Fourthly, inhibitors of apoptosis do not affect the process. Finally, inhibitors of cell division do not affect the process. In terms of the molecular mechanism, inhibitor studies suggest that de novo DNA methylation is required for the loss of the K8 expression but not for the acquisition of the K14 expression. The results show that, in normal development, the squamous epithelium arises from the columnar epithelium by a direct conversion process.