Carcinoembryonic antigen (CEA) is a member of a family of cell surface glycoproteins that are produced in excess in essentially all human colon carcinomas and in a high proportion of carcinomas at many other sites. The function of this widely used tumor marker and its relevance to malignant transformation is therefore of considerable interest. We demonstrate here that CEA mediates Ca2+-independent, homotypic aggregation of cultured human colon adenocarcinoma cells (LS-180) and rodent cells transfected with functional CEA cDNA. Furthermore, CEA can effect the homotypic sorting of cells in heterogeneous populations of aggregating cells. CEA can thus be considered a new addition to the family of intercellular adhesion molecules. We also show that, whereas CEA is localized mainly to epithelial cell membranes facing the lumen in normal adult intestine, it is found on adjacent cell membranes in both embryonic intestine and colonic tumors. A model for the role of CEA in the tissue architecture of adult, embryonic, and aberrant tumor intestinal epithelium is presented.