When P19 embryonal carcinoma (EC) cells were cocultured with cells from one of several established visceral-endoderm-like cell lines, the EC cells were rapidly induced to aggregate and differentiate, into cell types including mesoderm-derived cardiac and skeletal muscle. Neither parietal-endoderm- nor mesoderm-like cell lines induced aggregation or differentiation of EC cells in coculture, although a cell line with both parietal and visceral endoderm characteristics induced aggregation but not differentiation. Also, without the feeder cells aggregates of P19 failed to differentiate, provided that serum in the culture medium had been previously passed over dextran-coated charcoal to remove lipophilic substances, which may include endogenous retinoids. All experiments were carried out using serum treated in this way. Taken together, the results demonstrated that aggregation was necessary, but not sufficient, to make P19 EC cells differentiate. Direct contact between the two cell types was not necessary, since even when separated by an agar layer in cocultures, aggregates of P19 still differentiated. Medium conditioned by cells of the END-2 line, a visceral-endoderm-like derivative of P19, was particularly potent in inducing endodermal and mesodermal differentiation of single P19 aggregates, confirming the involvement of a diffusible factor secreted specifically by visceral-endoderm-like cells in this process.