Heart failure is a major cause of premature death and disability in the United States. Stem cell therapy has attracted great interest for the treatment of myocardial infarction and heart failure. Some tissue-specific adult-derived stem cells demonstrate plasticity in that they are multipotent, react to inductive signals provided by a new micro-environment, and acquire the phenotype of cells endogenous to the new micro-environment. The mechanism through which this phenotype is acquired is unknown. We have demonstrated that a liver-derived clonal stem cell line, WB F344, differentiate into cardiomyocytes in vivo and in vitro. Using a coculture model of neonatal heart cells and WB F344 cells, we have found that cytosolic communication between the two cell types results in calcium-induced transcription of cardiac transcription factors and appears to usher in the cardiac phenotype. Functional gap junctions and IP3 receptors appear to be required for this process. We propose that the observed low frequency of stem cell differentiation into cardiomyocytes when transplanted into the injured heart is due, in part, to their inability to establish functioning intercellular communications with healthy cardiomyocytes and receive instructive signals needed to activate a cardiac gene program.